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Tuesday October 31, 2006 - 10:10:11 GMT
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ACM - www.ac-markets.com
Dollar was mixed after US income and inflation data.
By Jean-Claude Braha - ACM Senior Trader
Yesterdays News and Events:
The dollar was little changed against the Euro and Yen on Monday with dealers mostly on the sidelines before BoJ Tuesday morning report and ECB meeting later this week. The Dollar had a mixed picture yesterday; US Personal Income rose +0.5% (0.3% expected) and consumption rebounded at 0.4% (vs -0.1) suggesting economic growth is likely stronger. But the core Personal Consumption increased 2.4% less than previous month as expected. The market will get a better picture of the US economy on Friday with October employment report. This morning, UsdJpy went higher after weak economic data in Japan which created some doubt that the Bank of Japan would be able to raise interest rates this year. Earlier data showed Japanâ€™s unemployment rate higher to 4.2% (Sept) vs 4.1%. household spending went down at 6% in September (YoY) much lower than expected and down for a ninth straight month. Most market players believe the BoJ will raise rates to 0.5% in the first quarter 2007, while a minority still sees a chance for a move in December. Recently, central Banks of Switzerland, Russia and United Arab Emirates have indicated interest in shifting (or already done) some foreign reserves into the Yen.
Todays Key Issues:
BoJ rate decision 0.25% unchanged. BoJ made little change in his report and reiterated it would gradually adjust rates based on economic and price conditions. Today, lots of European news. German Retail Sales due at 7:00 GMT expected 0.6% vs 0% (MoM) and 1.9% vs 1% (YoY). French Consumer Confidence Indicator (Oct) due at 7:40 GMT expected -20 vs -22. Eurozone October Indicators due at 10:00 GMT; Business Climate Indicator 1.43 vs 1.46, Economic Confidence 109.5 vs 109.3, Industrial Confidence 4 unchanged, Consumer Confidence -8 unchanged and Eurozone CPI (estimate Oct) 1.7% vs 1.8%. GB October consumer Confidence Survey due at 10:30 GMT expected -6 vs -7. Due at 13:30 GMT; CAD August Gross domestic Product expected 0.3% vs 0.2% and USD Employment Cost Index (3Q) expected 0.9% unchanged. US Consumer Confidence and Chicago Purchasing Manager are due at 15:00 GMT respectively expected 107.8 vs 104.5 and 58 vs 62.1.
The Risk Today:
EURUSD spent Monday in a tight range consolidating gains from last week. While there is room for corrective pressures to the downside; 1.2660 could be cleared easily but solid support at 1.2620 should be difficult to break. As long as this support holds, the broader rally from 1.2480 should keep its focus on 1.2770 (early Oct. high). USDCHF remains heavy after quickly testing yesterday again 1.2474 support (61.8% retracement of the 1.2291-1.2771). Nest support is holding 1.2400 (early oct. low). Only a move above Friday's 1.2572 reaction high would relieve downward pressure for now. GBPUSD maintains a strong tone, adding further gains on Monday. It is getting closer to the 1.9075 strong resistance but need first to clearly break 1.9030 pivot point. Next strong support is located at the 1.8660 area, but only a break of 1.8870 would open the way toward 1.8660 and 1.8601. USDJPY consolidated Friday's losses, staying below minor resistance 118.05. There's also little support now till 116.24 (61.8 retracement of the 113.97-119.90) followed by 116.06 trendline support.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2941 T ||1.9144 K ||120.00 P ||1.2800 T |
|1.2880 K ||1.9075 S ||119.90 S ||1.2736 S |
|1.2750 S ||1.9030 P ||118.05 M ||1.2550 P |
|1.2685 ||1.9015 ||117.64 ||1.2524 |
|1.2660 M ||1.8874 M ||117.40 S ||1.2474 S |
|1.2620 S ||1.8660 S ||117.16 M ||1.2400 K |
|1.2450 T ||1.8601 P ||116.06 T ||1.2287 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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