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Thursday December 7, 2006 - 10:39:21 GMT
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ACM - www.ac-markets.com
Dollar edges modestly higher as ECB meeting is awaited.
By Jean-Claude Braha - ACM Senior Trader
Yesterdays News and Events:
The Dollar advance was fairly modest as investors are waiting European Central Bank meeting at which officials were expected to lift interest rates and comment recent currency advances. ECB may also give clues about the outlook for 2007. So far, most Euro-zone policymakers have said Euro above 1.3000 is no cause for concern but are little worried about a strong Euroâ€™s impact on exports. ADP Employment Services added 158k jobs in November which is an early sign that Friday US non-farm payrolls reports may come out at a bigger than expected net gain. GBP was pressured by softer than expected UK industrial production data and was down more than 0.35% at 1.9662. The Bank of England will also meet today, widely expected to leave rates unchanged; market will focus on inflation risks which could signal futures hikes and help GBP reverse yesterday losses. The New Zealand Dollar jumps up this morning after the Central Bank kept rates steady but said it could not rule out further tightening. NzdUsd traded early at 0.6910 up 0.75%. Also the Bank of Canada kept rates at 4.25%; UsdCad was up 0.45% at 1.1477. And the Reserve Bank of Australia also kept rates steady, while Bank of Japan Policy Board member Kiyohiko Nishimura said today that the BOJ could raise interest rates even if its views on monetary policy do not completely match those o financial markets. Japanese rates are expected to raise 25bp to 0.5% by the end of the first quarter next year. Forex dealers are still bearish on the Dollar because, even on profit taking, the Euro is holding up pretty well and awaited comments from Trichet on Thursday wonâ€™t put EurUsd back soon to 1.2000.
Todays Key Issues:
GB Bank of England Rate decision due at 12:00 GMT is expected unchanged at 5%. Euro European Central Bank Rate decision due at 12:45 GMT is expected 3.5% up 0.25%. Are due at 15:30 GMT; GB October Leading Indicator Index previously 0.2% and Coincident Indicator Index previously 0.2%.
The Risk Today:
EurUsd pulled back modestly yesterday but the outlook for the Euro remains bullish and there is more potential for gains beyond Monday's 1.3364 high to pave the way for an extension towards 1.3400. Beyond 1.3400, the target is 1.3480 (March 2005 high) ahead of the major 1.3666 all time traded high from late-December 2004. Near-term support holds 1.3220. UsdChf down trend remains intact with conditions continuing to provide a bearish market sentiment. The focus is on 1.1760 (76.4% retracement of the major rally from 1.1286 to 1.3287) and then 1.1740 (April 2005 low). Maintain a bearish tone below last Wednesday's 1.2120 high. However; the minor resistance stays at 1.2009 and this level must remain intact to avoid a test of 1.2120. GbpUsd November gains are likely to extend near-term and a break of last Friday's 1.9850 trend high will pave the way for a test of the psychological 2.0000 level ahead of the major resistance at 2.0100 ( Sept 1992). Minor support is located at 1.9616 (yesterday's low), however strong support remains 1.9550, the former key resistance and breakout point. UsdJpy trend remains clearly bearish at this stage having tested 114.44 (50% retracement of the 108.98 to 119.90 decline). The focus now is 114 support and potentially 113.45 (61.8% retracement).
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3666 T ||2.0100 T ||119.90 T ||1.2346 K |
|1.3480 K ||1.9900 S ||118.60 S ||1.2120 S |
|1.3400 P ||1.9850 P ||116.60 S ||1.2009 M |
|1.3310 ||1.9692 ||114.96 ||1.1934 |
|1.3220 S ||1.9635 M ||114.45 S ||1.1920 P |
|1.3130 P ||1.9550 S ||114.00 S ||1.1760 S |
|1.2941 M ||1.9435 K ||113.45 T ||1.1740 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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Wed 18 Oct /ul>
12:30 US- Housing Starts & Permits
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Thu 19 Oct
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Fri 20 Oct
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- 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.
- POTENTIAL PRICE RISK: Medium Thu-- 01:30 GMT AU- Employment. Top economic indicator.
- POTENTIAL PRICE RISK: Medium Thu-- 02:00 GMT CN- GDP. Top economic indicator.
- POTENTIAL PRICE RISK: HIGH Thu-- 08:30 GMT GB- Retail Sales. Top consumption indicator.
- POTENTIAL PRICE RISK: Medium Thu-- 12:30 GMT US- Weekly Jobless. Employment Indicator.
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