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Wednesday September 20, 2006 - 09:55:09 GMT
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ACM - www.ac-markets.com
Dollar extends losses after soft data
By Jean-Claude Braha - ACM Senior Trader
Yesterdays News and Events:
The dollar fell after soft data on US housing market: US Aug Building permits felt by -2.3% vs -5.7% and Housing Starts by -6% vs -2.5%. Comments supported the view that the Federal Reserve will keep rates on hold today meanwhile other Central Bank will raise rates in the near future. The Zew indicator of Economic Sentiment went down by 16.6. Current level -22.2 is now far below its historical average of 34.7. Eurusd swing down 1.2651 and up to 1.2718 before easing nearly unchanged around 1.2680. The market has seen hawkish comments from ECB recently, while there are high expectations the Fed will keep rates at 5.25% in September and may show signs it will not change for the rest of the year. Remarks from Japanese Finance Minister Tanigaki appeared bullish for the Yen after he said it was â€śtoo simple to say the Yen will rise as the economy improves,â€ť Eurjpy was down 149 after touching high 150.20 the day before. UsdJpy was also down 117.57 from 118.20 high as JPY shot higher against all major crosses. Coup in Thailand; the Thai Baht took its largest fall in 3 years last night as investors are running for safe-haven US Dollar. It jumped nearly 1.9% from 37.2 to 37.90.
Todays Key Issues:
GB Minutes of the Bank of Englandâ€™s early September meeting due at 8:30 GMT. Also at this time; GB August Public Finances due and GB August M4 Money Supply (+13.5% to +13.8% YoY, lending ÂŁ18B to ÂŁ22B, vs +13.1% and ÂŁ21.4B in July). CA August Leading Indicators due at 12.30 GMT, 0.2% unchanged. US Fedâ€™s FOMC interest rate decision due at 18:15 GMT, expected unchanged at 5.25%.
The Risk Today:
EURUSD remains heavy below 1.2755. As it was tested early this week, the possibility to break down 1.2640 (61.8% retracement of the 1.2456 to 1.2980) reinforce the bearish tone. We maintain a negative tone below 1.2755, looking for extended downside towards 1.2570 (76.4% retracement). USDCHF immediate up-trend is intact above 1.2400. A near-term break 1.2640 will pave the way towards 1.2740 (61.8% retracement of the 1.3241 to 1.1919). Intraday support is at 1.2485. Early this week, GBPUSD has failed break of the 1.8906 (61.8% retracement of the 1.9094 to 1.8601). The focus remains on 1.8710 support that could open the way to 1.8610 (Sept 11 low). A break of 1.8601 would confirm a construction of a down channel from 1.9146 (Aug high). USDJPY went near 118.50 key trendline resistance. Initial support stand at 116.99; where a break would pave the way for deeper intraday losses towards the next key support at 115.60. On the upside, dealers continue to monitor 118.50 where a â€śjump and holdâ€ť is required to extend gains towards 119.40. USDCAD has cleared resistance at 1.1245 (50% retracement of the 1.1460 to 1.1029) paving the way towards 1.1295 (61.8% retracement). The pair has traded close to this level and a break would suggest potential for 1.1375. Look for intraday support to come in at 1.1165.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2950 K ||1.9094 K ||121.07 K ||1.2760 S |
|1.2920 S ||1.8920 M ||119.41 T ||1.2640 T |
|1.2755 M ||1.8900 S ||118.50 S ||1.2597 S |
|1.2676 ||1.8824 ||117.15 ||1.2527 |
|1.2640 S ||1.8710 M ||116.60 K ||1.2400 T |
|1.2570 M ||1.8610 K ||115.50 S ||1.2360 S |
|1.2560 T ||1.8493 T ||114.75 T ||1.2310 K |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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