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Monday November 27, 2006 - 11:09:09 GMT
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ACM - www.ac-markets.com
Dollar fell sharply on Friday in a four consecutive weak session.
By Jean-Claude Braha - ACM Senior Trader
Yesterdays News and Events:
The Dollar fell sharply on Friday, pushing the Euro above 1.3100 for the first time since April 2005, on concerns about central banks diversifying their reserves and the Dollar loosing yield advantage over other currencies. The Euro rise started with the German business sentiment survey released last Thursday which pushed up the Euro over 1.3000 psychological level on stronger expectation that Euro-zone rates will keep rising next year. The Dollarâ€˜s fourth consecutive session of weakness is the result of accumulation of a main negative developments over the latest weeks; including weaker US economic data and comments from Asian Central Banks. Dealers have seen on Friday large liquidations of Carry trades in a low liquidity environment. Also the latest spike in volatility due to rapid short covering weighted further on the Dollar. This week US economic releases; including the ISM manufacturing activity index, core inflation and revised look at growth in gross domestic product in the third quarter, could determine if the Dollar will sustain last week losses. Last week; EurUsd rose to its highest at 1.3109 since April 2005, up 2% for the week. GbpUsd was also up 2% in the week at 1.9325 near the two-year high of 1.9350. UsdChf dropped to its lowest since June 2006 at 1.2094 -2.8% last week. EurJpy hit a record high since October 1998 at 152.50 this morning. UsdJpy went to a three-month low at 115.50. Traders said the Dollar could decline further if more unwinding of Yen Carry trades takes place.
Todays Key Issues:
GB October BBA Mortgage Lending is due at 9:30 GMT. NZD November NBNZ Business Confidence is due at 12:00 GMT, previous -21.7. Are due at 23:50 GMT Japan October figures; Large Retailersâ€™ Sales expected -0.4% vs 0.8%, Retail Trade expected 0.7% vs -1.4% (MoM) and 0.3% vs 0.7% (YoY).
The Risk Today:
EurUsd has continued it climb overnight jumping higher early Monday even if the trend seems to be overbought at current level. This raises the chances of a correction near-term to unwind the overbought intraday condition. However, the overall trend remains bullish and the former breakout point of 1.2980 is likely to provide support. Buy dips for a run at 1.3190 near-term (76.4% retracement of the 1.3663 to 1.1644 decline). UsdChf remains vulnerable following recent loss and latest break of the former 1.2185 support. Further downside is expected with the focus now on 1.2014 ahead of the key support at 1.1920. GbpUsd maintains a firm tone following the break of the former resistance at 1.9180. This has paved the way for a climb towards 1.9550 (Dec 2005 high) now that the 1.9320 level has also been broken. 1.9180 marks now initial support. UsdJpy, last week sharp losses is setting the scene for a decline towards 114.45 (50% retracement of the 109 to 119.90 advance). Look for 116.80 to provide near term resistance.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3320 T ||1.9550 T ||119.90 T ||1.2583 S |
|1.3190 K ||1.9320 M ||118.60 S ||1.2346 K |
|1.3131 S ||1.9219 S ||116.60 S ||1.2185 S |
|1.3110 ||1.9360 ||116.10 ||1.2090 |
|1.3000 K ||1.9144 K ||116.06 T ||1.2014 S |
|1.2980 S ||1.9050 S ||115.61 S ||1.1948 T |
|1.2941 M ||1.8840 K ||113.45 T ||1.1920 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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