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Friday December 22, 2006 - 09:01:15 GMT
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ACM - www.ac-markets.com
Dollar is stable ahead of US economic data and holidays
By Jean-Claude Braha - ACM Senior Trader
Yesterdays News and Events:
The Dollar was steady against the Euro and the Yen on Thursday as volumes were thin and investors consolidated their positions ahead of the holidays. The decline in the US Philly Fed business activity index to a 3 1/2 year low of -4.3 in December, from 5.1, is not as bad as it looks. (Consensus was +4.0.) The drop in the headline index stands in stark contrast to the improvement in the more tangible indexes. New orders improved to -2.4, from -3.7, shipments surged to 19.0, from 6.5, while the employment index recovered to 7.9, from 0.2. Based on these more tangible indexes in both the Philly Fed and Empire State surveys, we would normally expect the more closely watched ISM manufacturing index to rebound to about 55 in December, from 49.5 in November. But, weakness in the Manufacturing and Housing markets, earlier this week, has reinstate fears about the underlying health of the US economy heading into 2007 and has renewed investorsâ€™ comments that the Fed may cut rates early next year. Given the Dollar negative sentiment and the possibility of sharp prices swings during a period of thin liquidity ahead of seasonâ€™s holiday; some dealers said Dollar selling may resume. Separate reports showed weaker than expected Canadian Retail Sales and GDP growth put pressure on the Canadian Dollar; sending the UsdCad to an intraday high 1.1565. EurUsd was fairly unchanged at 1.3182. EurJpy was down 0.08% at 155.91 after hitting record high 156.43 overnight. GbpUsd was weaker by 0.17% at 1.9623.
Todays Key Issues:
Euro-Zone October Current Account due at 9:00 GMT is expected 1B vs -0.3B (Euro) and 0.3B vs -0.8B (n.s.a. Euro). GB October Index of Services due at 9:30 GMT expected 0.9% vs 0.8% (3M). Eur October Industrial new Orders due at 10:00 is expected 0.5% vs 1.3% (MoM) and 10.6% vs 7.6% (YoY). Are due at 13:30 GMT; US November Personal Income 0.4% unchanged, US Personal Spending 0.5% vs 0.2%, US PCE Deflator 1.9% vs 1.5% (YoY), US PCE Core 0.2% unchanged (MoM) and 2.4% unchanged (YoY), US Durable Goods Orders 1% vs -8.3% and ex-transportation 1.1% vs -1.7%. US December University of Michigan Consumer Confidence Survey is due at 15:00 GMT expected 90.2 unchanged.
The Risk Today:
EurUsd was fairly unchanged yesterday at 1.3182. The 1.3246 resistance marks the next upside trigger for a resumption of gains that would open the way to 1.3293 and 1.3400. Maintain a bullish tone above support at 1.3050. UsdChf trend remains still bearish while 1.2220 remains intact. A break of 1.2075 (50% retracement of the 1.1879-1.2271 rally) would confirm this tendency. GbpUsd recent decline rebound on 1.9435 key support as the general outlook in Cable having improved once again. Minor support is located at 1.9620. A break of minor resistance at 1.9730 would pave the way for a test of 1.9850. UsdJpy remains firm for now and only a break of 117.44 low would offset upward pressure and shift focus away from the key 118.60 important resistance (76.4% retracement of the 119.90-114.43 decline).
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3400 P ||1.9900 S ||120.00 K ||1.2346 K |
|1.3370 S ||1.9850 P ||119.90 T ||1.2326 S |
|1.3246 M ||1.9730 M ||118.60 S ||1.2220 S |
|1.3200 ||1.9640 ||118.35 ||1.2140 |
|1.3130 P ||1.9480 M ||117.44 S ||1.2075 S |
|1.3050 S ||1.9435 M ||116.60 M ||1.1920 P |
|1.2980 K ||1.9340 S ||114.00 S ||1.1880 T |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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