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Friday January 5, 2007 - 10:27:27 GMT
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ACM - www.ac-markets.com
Dollar extends gains in lower expectations for US interest rate cut.
By Jean-Claude Braha - ACM Senior Trader
Yesterdays News and Events:
The Dollar rose for the second straight day, gaining support from a recent run of economic data that has lowered expectations the Federal Reserve may cut interest rates in the coming months. Also some analysts said that the Dollar has gained support this week from falling oil prices. Previously this week; the ISM report on the non-manufacturing sector showed the index slipped to 57.1 in December from 58.9 the previous month broadly in line with expectations, and Pending Home Sales slipped slightly in November suggesting the sector may be stabilizing. The market will now focus on the Governmentâ€™s Non-farm payrolls report due today. Some analysts have lowered their forecasts for jobs growth in December since Wednesday, when the ADP National Employment report showed the first monthly net job loss in the private sector since 2003. EurUsd was down -0.6% at 1.3090 extending Wednesday losses. UsdChf rose 0.58% at 1.2323. UsdJpy fell -0.44% at 118.83 and EurJpy fell -1.05% at 155.54 as the Yen is strengthening across the board, taking a lead from a spike in Japanese government bond yields on Thursday. Japanese media have reported over the past week that the Bank of Japan will discuss lifting the overnight lending rate to 0.5% at its next policy meeting on Jan 17-18.
Todays Key Issues:
Are due at 10:00 GMT; Euro-zone December Consumer Confidence expected -7 unchanged, Industrial Confidence expected 6 unchanged, Services Confidence expected 20 vs 19, Business Climate Indicator previously 1.54, Economic Confidence expected 110.4 vs 110.3 and Euro-zone PPI expected 0.1% vs 0% (MoM) and 4.3% vs 4% (YoY). CAD December Unemployment rate due at 12:00 GMT is expected 6.3% unchanged. Are due at 13:30; US December Change in Non-Farm payrolls expected 113K vs 132K and Unemployment rate expected unchanged at 4.5%. Fedâ€™s Bernanke speaks to economists in Chicago at 18:30 GMT.
The Risk Today:
EurUsd violation of the 1.3090 low from Dec 26 exposes the formerly resistant 1.2980 Key level, which needs to hold in order to preserve our broader bullish view. Minimally the Euro now needs to re-surface above 1.3130 Pivot point to offset the immediate bear threat. UsdChf continues to probe higher and may extend gains to 1.2346 key resistance and 1.2430 (61.8% retracement of the 1.2771 to 1.1879 decline). Weakness below Thursday's 1.2240 low is required at this stage to reinstate a more negative tone for a re-test of 1.2110. GbpUsd broke down 1.9435 on Thursday, exposing 1.9340 (50% retracement of the 1.8835 to 1.9849 advance and the 38.2% retracement of the 1.8516 to 1.9849 advance). A recovery beyond 1.9530 would reinstate positive sentiment. UsdJpy couldnâ€™t retest 119.90 (Oct 13 high) and is now breaking down support at 118.30. Expanding further down pressure would expose 117.44 support. A recovery beyond 119.07 is necessary at this stage to relieve pressure on 118.30.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3400 T ||1.9850 P ||119.90 T ||1.2440 S |
|1.3370 S ||1.9750 M ||119.65 S ||1.2346 K |
|1.3130 P ||1.9530 S ||118.30 S ||1.2326 S |
|1.3090 ||1.9410 ||118.20 ||1.2290 |
|1.3050 S ||1.9340 S ||117.44 S ||1.2240 S |
|1.2980 K ||1.9185 M ||116.70 M ||1.2110 M |
|1.2940 S ||1.8840 S ||115.80 S ||1.2030 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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