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Wednesday January 17, 2007 - 09:32:06 GMT
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ACM - www.ac-markets.com
Yen slips on Japan reports suggesting BoJ may not raise rates.
By Jean-Claude Braha - ACM Senior Trader
Yesterdays News and Events:
The Dollar continued to move broadly higher, with softer Crude Oil price seen helping a highly oil related US economy. US crude oil fell to $50.53 on Tuesday, the lowest since May 2005. Also, the Dollar recovered losses against the CAD after the Bank of Canada left rates unchanged at 4.25%, as widely expected. UsdCad was up 0.7% at 1.1762. In the near future, few US economic reports including inflation, net capital inflows and housing data, due this week, would provide clues about where rates will be heading. The Yen slides to a 13-month low against the Dollar as media reports said the Bank of Japan was likely to hold interest rates steady this week. Investors had anticipated a BoJ rate rise to 0.5% this week was a done deal in the run-up to the Central bankâ€™s two-day policy meeting ending on Thursday before reports from Kyodo News Agency, the Nikkei Newspaper and others. The report said the BoJ want to take more time to assess the strength of consumer spending and wait for more signs of a pick-up in consumer prices. This sudden doubt about raise rate undermined the Yen, which was already suffering from a very little expectation of 0.25% raise; keeping the Yen as the lowest yielding of major currencies. EurUsd fell -0.13% to 1.2918 and analysts expect the Euro to trade weaker in the near term with projection on 1.2600. EurJpy was up 0.25% at 156.04 still close to its strongest peak 158.06. UsdJpy traded as high as 120.86, its highest since December 2005. In carry trades; recent Gbp rate increase helped pushing GbpJpy to an eight-year high 237.29 +0.3%.
Todays Key Issues:
Are due at 9:30 GMT; December GB Jobless Claims change expected -4k vs -5.7k and Claimant Count Rate 3% unchanged. Are due at 10:00 GMT; Euro-zone December Consumer Price Index is expected 0.4% vs 0% (MoM) and 1.9% unchanged (YoY), CPI- Core expected 0.5% unchanged (MoM) and 1.6% vs 1.5% (YoY), Euro-zone November Trade Balance expected 3.9B vs 2.4B. Are due at 13:30 GTM; US December PPI expected 0.5% vs 2% (MoM) and 0.7% vs 0.9% (YoY), PPI ex-Food & Energy expected 0.1% vs 1.3% (MoM) and 2.1% vs 1.8% (YoY). US November Net long-term TIC Flows due at 14:00 GTM is expected $82.5B vs $82.3B. US December Industrial Production due at 14:15 GMT is expected 0.1% vs 0.2%. US January NAHB housing Market Index due at 18:00 GMT is expected 33 vs 32. JPN November Tertiary Industry Index due at 23:50 GMT is expected -0.1% vs 2.1% (MoM).
The Risk Today:
EurUsd outlook remain bearish with the recent upward correction from Friday's 1.2866 low holding well below the 1.3050 resistance. Only a move above there would jeopardize the underlying bear trend. Until then, our focus will remain on the 1.2866 short-term trends low. UsdChf recent pullback from 1.2534 is holding above support 1.2400, keeping the underlying bull trend intact. An eventual move above 1.2540 would reinstate the bull trend for a push above the 1.2585. GbpUsd rebound after rate raise and keeps focusing on 1.9753 strong resistance and 2007 highest. A move above there would expose key resistance at 1.9850, last year's high. UsdJpy posted a new trend high at 120.86 overnight but without much subsequent follow through; it remains constructive and should continue for a run toward the 121.40 high from December 2005 and trend resistance. Initial support at the bottom of the recent consolidation is 120.06.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3130 P ||2.0000 T ||122.15 S ||1.2770 T |
|1.3050 S ||1.9850 P ||121.40 T ||1.2585 M |
|1.2980 K ||1.9753 S ||120.89 M ||1.2540 S |
|1.2920 ||1.9630 ||120.75 ||1.2495 |
|1.2900 T ||1.9570 S ||119.90 T ||1.2430 K |
|1.2820 S ||1.9428 M ||118.00 P ||1.2400 M |
|1.2771 S ||1.9315 S ||117.44 S ||1.2220 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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