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Monday October 2, 2006 - 06:11:31 GMT
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ACM - www.ac-markets.com
Dollar holds steady, trapped in ranges
By Stéphane Marie - ACM Senior Trader
Yesterdays News and Events:
After trading near two weeks highs against the euro Friday, the dollar retraced most of its gains as profit seeking investors sold greenbacks rather than trying to pierce well worn ranges. There was some relatively dollar positive U.S. economic data released Friday morning that had the potential to push the greenback into new, stronger frontiers against the yen and euro after several months of tight summer trading. The dollar began the NY session on a positive note after a sell off of the UK pound pushed the dollar higher across the board in earlier global trading. Analysts said the pound was still being punished for a Wednesday announcement by the UK Office for National Statistics that it had overestimated the cash value of national income last month. It looks like the bank of England wonâ€™t be as quick to raise interest rates.
The yen gave up brief gains against the dollar and the euro after a surprisingly strong tankan survey of business sentiment did little to change the outlook for the Bank of Japan to raise interest rates only gradually.
Todays Key Issues:
Euro-zone PMI Manufacturing Survey at 09h00 (BST).
UK PMI Manufacturing Survey at 09h30 (BST).
US ISM Manufacturing at 15h00 (BST).
The Risk Today:
The market tried to react on the positive data, but the yen didnâ€™t go up. The Japanese currency is structurally weak, despite the strong data; the yen will continue to be weak. The dollar rose as high 118.40 yen, the strongest since mid April, before slipping back to 118.20 yen, little changed from level in late NY trade on Friday.The European Central Bank is widely seen lifting rates to 3.25% at a meeting on Thursday. The Reserve Bank of Australia and Bank of England are also slated to meet this week.Record low at-the-money implied volatility in many currencies pairs hints that some may give up on foreign exchange all together. The more this becomes the case, the higher the likelihood of a big move in Q4, where end-of-year book squaring and thin markets are likely to exacerbates moves. We see no reason to reverse our long held outlook for a weaker US dollar despite the extraordinarily slow pace this year.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2880 K ||1.8880 S ||119.80 T ||1.2700 S |
|1.2834 S ||1.8810 T ||119.30 S ||1.2625 T |
|1.2763 M ||1.8775 M ||119.00 P ||1.2545 M |
|1.2670 ||1.8700 ||118.35 ||1.2520 |
|1.2630 S ||1.8683 M ||118.00 T ||1.2500 T |
|1.2580 K ||1.8650 S ||117.75 S ||1.2460 S |
|1.2500 M ||1.8620 K ||117.25 K ||1.2425 K |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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Amazing Trader EVENT RISK Calendar:
Mon 16 Oct /ul>
01:30 CN- CPI
21:45 NZ- CPI
Tue 17 Oct
08:30 GB- CPI
09:00 DE- ZEW Survey
09:00 EZ- Final HICP
Wed 18 Oct
12:30 US- Housing Starts & Permits
14:30 US- EIA Crude
Thu 19 Oct
01:30 AU- Employment
08:30 GB- Retail Sales
12:30 US- Weekly Jobless
Fri 20 Oct
12:30 CA- Retail Sales & CPI
14:00 US- Existing Homes Sales
John M. Bland, MBA
- POTENTIAL PRICE RISK: HIGH Tue-- 08:30 GMT GB- CPI top tier confirmation of Inflation.
- POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT DE- ZEW Survey second most important German monthly Survey.
- POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT EZ- final HICP revision to flash report. Revisions are usually minor.
- POTENTIAL PRICE RISK: Medium Tue-- 13:15 GMT US- Industrial Production. Top output indicator.
- POTENTIAL PRICE RISK: Medium Wed-- 12:30 GMT US- Housing Starts and Permits revision to flash report. Useful housing leading indicator.
- POTENTIAL PRICE RISK: Medium Wed-- 14:30 GMT US- EIA Crude. Top WTI inventory measure.
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