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Friday October 20, 2006 - 09:31:48 GMT
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ACM - www.ac-markets.com
Dollar dropped down on surprise fall in Philly Fed Survey.
By Jean-Claude Braha - ACM Senior Trader
Yesterdays News and Events:
The dollar went down on Thursday after a Philly Fed survey showed a surprise fall in business activity in the US Mid-Atlantic region in October. This is renewing worries about strength of the US economy. The Philadelphia October Business Index came down -0.7% vs 0.7% expected and previous month -0.4% surprising analyst and erasing Dollar this week gains. Actually, it was some rumours that it could be a very strong number but it came very weak and accelerates the Dollar selling. EurUsd went up 0.8% to 1.2640 early this morning from 1.2535. UsdJpy fell 0.7% to 118.04 from yesterday high 118.93. Usdchf went down 1.2% at low 1.2550 from yesterday 1.2705. This was the biggest fall in CHF in the last three months. The dollar rose to multi-month highs against major currencies earlier this month after block of good economic data reduced speculation that the Fed may cut interest rates early next year. This week the Euro failed break below the 1.25 psychological level. On the same period, the Dollar tried several times to break up Yen 120 key resistance level. With no US data due today, investors will shift focus to the Fed next week meeting. Mainly, the Central Bank is expected to keep rates on hold at 5.25% unchanged since last June.
Todays Key Issues:
It is a light economic news day. Beginning with low impact CH September PPI due at 7:15 GMT expected -0.4% vs 0.4% (MoM) and 2.1% vs 3.10% (YoY). Followed by GB GDP due at 8:30 GMT, expected 0.6% vs 0.7% (QoQ) and 2.7% vs 2.6% (YoY). Last will be CAD September CPI due at 11:00 expected -0.3% vs 0.2% (MoM) and 1% vs 2.1% (YoY).
The Risk Today:
EurUsd recovery from last week 1.2483 low had accelerated smartly through the 1.2580 reaction high and another one at 1.2630, moving briefly on 1.2640 area early this morning. Follow-through 1.2647 and 1.2661 respectively (previous lows in Sep), would open the way to 1.2700 (61.8% retracement of the 1.2834-1.2483). Only a move below Tuesday's 1.2570 high would put the bear tone back on tracks. Down almost all week, USDCHF went through the 1.2640 support pushing down the 1.2570 (former September resistance). Penetration down there would expose 1.2530 (50% retracement of the 1.2291-1.2770).
GBPUSD went through the 1.8756 minor resistance, but lost strength in front of 1.8810 (76.4% retracement of the 1.8904-1.8516). Only a move above there would erase the latest bear trend from the 1.9075 Sep high. A break of the 1.8660 would put this bear trend back in control. USDJPY tested 118.50 support, sliding from 119.90 weekly high. Next supports are holding the 117.40 and 116.06 levels. Only a break over 119.20 would reverse this bearish dollar trend.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2880 K ||1.9075 T ||120.00 P ||1.2800 P |
|1.2700 S ||1.8901 S ||119.90 S ||1.2736 S |
|1.2640 M ||1.8810 S ||118.50 M ||1.2640 M |
|1.2620 ||1.8762 ||118.34 ||1.2586 |
|1.2570 S ||1.8660 M ||118.05 M ||1.2570 M |
|1.2450 T ||1.8601 P ||117.40 S ||1.2330 S |
|1.2400 S ||1.8516 K ||116.06 T ||1.2400 K |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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