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Thursday October 19, 2006 - 08:00:20 GMT
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ACM - www.ac-markets.com
Dollar gain after inflation data reported in line.
By Jean-Claude Braha - ACM Senior Trader
Yesterdays News and Events:
The Dollar rose on Wednesday after key measure of US inflation was reported in line with forecasts and Housing Starts unexpected stronger number. The US September CPI felt -0.5% below consensus of -0.3% (MoM). This put the annual growth rate down dramatically to 2.1% from 3.8% previously. However, the Fed will remain focused on core inflation, which hit a ten year high of 2.9% (YoY) after an expected 0.2% (MoM) increase in core prices. The US Home Building accelerated in September as new housing starts rose 5.9% at 1772k vs 1640k and revised at 1674k for August. New Building permits fell more than expected to a near five year low by 6.3% to an annual pace of 1619k. Overall, US CPI went down helped by a big drop in energy prices. There is still some uncertainty about the course of US interest rates, but most investors are looking for the next move in rates to be a cut from the current 5.25%. On the other hand; recent data helped Dollar bulls believe there is enough momentum in the economy to force the Fed to raise interest rates at least one more time! GBP went lower after Minutes of BoE October policy meeting which showed two newest members in favour of a rate hike from the actual 4.75%. Jpy has been boosted in the European session on news there was a chance that China may show greater flexibility in exchange rate next year. (Yen work as proxy for Chinaâ€™s Yuan).
Todays Key Issues:
CH September Trade Balance due at 6:15 GMT is expected 1.45B vs 0.54B. Are due at 8:30 GMT; GB September Retail Sales expected 0.3% unchanged (MoM) and 4% vs 4.3% (YoY), GB September Public Finances expected Â£11.9B vs Â£3.7B and GB Public sector net Borrowing Â£5B vs Â£7.6B. US September Leading Indicators due at 14:00 GMT is expected 0.3% vs -0.2%. US October Philadelphia Fed due at 16:00 GMT is expected 7 vs -0.4.
The Risk Today:
EURUSD is still maintaining a bearish theme and the nearest focus remains on the key support at 1.2450. A break of this support would be seen as a new bearish development and will pave the way for a decline towards 1.2400 and 1.2266 (50% and 61.8% retracements of the 1.1825 to 1.2980 advance respectively). Last Friday's 1.2580 high is our short term resistance followed by an important resistance on 1.2630 pivot point. USDCHF bullish theme remains intact above the former resistance now support at the 1.2640 level. Focus remains on further USD gains over the near-term towards 1.2930 (76.4% retracement of the 1.3241 to 1.1919). GBPUSD made another small step correction around 1.8670 going away from early October resistance 1.8901. Last weekâ€™s low of 1.8516 shows the next key downside trigger. USDJPY rebound from recent low 118.31 after testing 118.50. Further strong support is still fixed at 117.40. Possibility for a break higher may still come, which would bring us up to last week high 119.90 and therefore testing of the psychological 120 level.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2880 K ||1.9140 T ||121.40 T ||1.2930 S |
|1.2630 P ||1.9075 M ||120.74 M ||1.2800 P |
|1.2580 S ||1.8901 S ||120.00 P ||1.2736 S |
|1.2541 ||1.8681 ||118.86 ||1.2693 |
|1.2450 T ||1.8601 P ||118.50 P ||1.2640 M |
|1.2400 S ||1.8516 K ||117.40 S ||1.2400 K |
|1.2325 S ||1.8400 T ||116.06 T ||1.2287 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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