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Thursday January 4, 2007 - 09:16:08 GMT
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ACM - www.ac-markets.com
Dollar rose as US December ISM was stronger than forecast.
By Jean-Claude Braha - ACM Senior Trader
Yesterdays News and Events:
The bigger than expected rebound in the ISM Manufacturing Index to 51.4 in December from 49.5 is good news. The consensus forecast was 50. But analyst said the index may drop towards the mid-40s over the first half of this year as growth in the manufacturing sector and wider economy slows. Further to this, the Dollar advanced broadly on Wednesday hitting two-month highs against the Yen. This advance has been partly reversed after the release of minutes form the Federal Reserveâ€™s December policy meeting even as the overall trend for the day remained up. The minutes indicated the Central Bank sees increased downside risks to economic growth even as inflation remained the predominant concern. Participant in the policy-making FOMC said the slowdown in the housing sector continued to weight heavily on economic activity in US. This soft report led traders believe that the more closely watched Non-farm Payrolls report due on Friday could also come in softer than expectations. A weak reading in that payrolls report would likely help the view that the Federal Reserve may start cutting interest rates in coming months to shore up a slowing economy. Eurusd went down -0.79% to 1.3170, its biggest one-day decline in the past 2 months. GbpUsd dropped -1.08% to 1.9519, its biggest one-day decline since July 2006. UsdJpy was up 0.42% at 119.35 after reaching as high as 119.69. UsdChf rose 1.05% to 1.2261.
Todays Key Issues:
Are due at 09:30 GMT; GB M4 Money Supply previously 0.5% (MoM) and 13.1% (YoY), Net Consumer Credit expected 1.0B vs 1.1B and Mortgage Approvals November expected 128k unchanged. Euro-zone December CPI estimate due at 10:00 GMT is expected 1.9% vs 1.8%. GB December GfK Consumer Confidence Survey due at 10:30 GMT is expected -6 vs -7. US 30 December Initial Jobless Claims due at 13:30 GMT is expected 318k vs 317k. Are due at 15:00 GMT; US November Factory Orders 1.3% vs -4.7%, US December ISM Non-manufacturing 57 vs 58.9 and US November Pending Home Sales 0.9% vs -1.7% (MoM).
The Risk Today:
EurUsd has reversed from its early week advanced and couldnâ€™t confirm latest break of 1.3250 for further target 1.3292. But the near-term outlook remains constructive above 1.3130 pivot support. A return above 1.3250 would still expose 1.3292 and 1.3370 trend resistance high. UsdChf has been well supported above 1.2110. A break of 1.2270 would confirm recent advance and target 1.2326 next resistance. But weakness below 1.2110 would still target 1.2030 (61.8% retracement of the 1.1879 to 1.2273 advance). Maintain a near-term negative bias under 1.2270. GbpUsd tested down 1.9516 to 1.9483 yesterday low but remains constructive above 1.9516 Christmas low. We continue to look for a move through 1.9750 to provide the catalyst for a move to 1.9850. UsdJpy took advantage of its recent consolidation around the Dec 26 119.23 trend high, holding above initial support at 118.30. Still it would take return below 117.44 strong support to threaten the actual bullish trend and further advance on the 119.90 peak and 120 psychological level.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3400 T ||1.9900 S ||120.00 P ||1.2346 K |
|1.3370 S ||1.9850 P ||119.90 T ||1.2326 S |
|1.3250 M ||1.9750 M ||119.65 S ||1.2270 S |
|1.3170 ||1.9525 ||119.36 ||1.2255 |
|1.3130 P ||1.9516 M ||119.24 M ||1.2110 M |
|1.3050 S ||1.9435 M ||118.30 M ||1.2030 S |
|1.2980 K ||1.9340 S ||117.44 S ||1.1880 T |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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