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Wednesday November 29, 2006 - 08:53:29 GMT
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ACM - www.ac-markets.com
US data suggest the Federal Reserve may cut interest rates next year.
By Jean-Claude Braha - ACM Senior Trader
Yesterdays News and Events:
The Dollar fell for the fifth consecutive session on Tuesday, sending the Euro above 1.3200 for the first time since March 2005, as US data supported expectations the Federal Reserve may cut interest rates early next year. Yesterday, Mr. Bernanke made unlikely comments, saying the US economic would expand at a moderate rate and core inflation should ease. The bigger than expected 8.3% (MoM) decline in Durable Goods Orders in October was principally because of the drop back in aircraft bookings to more normal levels after the spike higher in September. The market was expecting a more modest fall of 5%. There was also a 1.7% decline in core orders. It was driven by a 10.2% drop in orders for computers/electronics and a 2.5% drop in fabricated metals orders. The most disappointing element of this report is the emerging weakness in the capital goods sector, which suggests that business investment is going badly in the fourth quarter. US consumer confidence unexpectedly slipped to 102.9 in November, from 105.1 and market expectation of confidence to improve to 106.0. EurUsd climbed as high as 1.3220 in late US session. Since the Dollar began weakening last Wednesday, the Euro has strengthened by over 2%, taking its gains for the year to around 11.5%. GbpUsd rose to a two-year high 1.9542, but didn't reach 1.9555 high from December 2004. EurJpy went up to 153.45; itâ€™s highest since October 1998.
Todays Key Issues:
GB figures due at 9:30 GMT; October Net Consumer Credit expected 1.0B vs 0.9B and Net Mortgage Lending expected 9.0B vs 8.9B. CHF November KOF Swiss leading Indicator due at 10:30 GMT is expected 1.9 vs 2.0. Are due at 13:30 GMT; CAD October Industrial Product Price expected -0.1% vs -1.6%, CAD October Raw materials Price Index expected -1% vs -5.2%, CAD (3Q) Current Account expected 3.45B vs 4.2B. US figures due at 13:30 GMT; GDP Price index expected 1.8% unchanged and 1.8% vs 1.6% annualized, Core PCE (3Q) expected 2.3% unchanged. US October New Home Sales is due at 15:00 GMT expected 1050k vs 1075k and -2.3% vs 5.3% (MoM). Euro-zone, ECBâ€™s Trichet speaks on Europeâ€™s economic growth prospects at 18:30 GMT. US Fedâ€™s Beige Book (Dec 12) FOMC meeting due at 19:00 GMT. Euro-zone, French Unemployment Rate due at 18:00 GMT is expected 8.8% unchanged.
The Risk Today:
EurUsd overextended its recent rally and may be now subject to some corrective pressures. A break of last at Monday 1.3086 low support would point to a meaningful setback. Recent violation of the 1.3190 Fibonacci resistance leaves the way open toward next significant resistance 1.3320. USDCHF remains heavy after consolidating recent losses. Further weakness would drive the way through 1.2014 support and 1.1948 trendline down to 1.1920 Key support. Only a move above minor resistance 1.2112 would offset the underlying bear tone. GbpUsd is targeting the 1.9550 trendline resistance (Dec 2004). A break of the 1.9325 support would offset the bullish tone. UsdJpy continued the last week sell off, lowering near 115.61 support. Only a move above 116.60 would open a door for a corrective rally toward 118.60. A break of 115.61 support will accelerate downtrend through 115.28 toward 114.45.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3320 T ||2.0100 K ||119.90 T ||1.2583 S |
|1.3220 M ||1.9825 S ||118.60 S ||1.2346 K |
|1.3190 K ||1.9550 T ||116.60 S ||1.2185 S |
|1.3190 ||1.9529 ||115.67 ||1.2031 |
|1.3086 S ||1.9465 S ||115.61 S ||1.2014 S |
|1.2980 S ||1.9325 S ||115.28 M ||1.1948 T |
|1.2941 M ||1.9144 K ||114.45 S ||1.1920 K |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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AA: Major, A: High, B: Medium
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