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Thursday January 25, 2007 - 10:22:45 GMT
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ACM - www.ac-markets.com
Yen rebounds as G7 comments boosted short covering.
By Jean-Claude Braha - ACM Senior Trader
Yesterdays News and Events:
The Yen recovered from recent lows against the Dollar and Euro Wednesday on news that European Finance Ministers will push for a stronger Japanese currency at next monthâ€™s G7 meeting. It began its rebound even before the report as investors in Asia and Europe closed positions against the Yen, which had dropped early this week to a multi-year lows against major currencies. The Yen has been under pressure since the Bank of Japan left rates unchanged last week, as investors had pushed down the low-yielding currency by borrowing it to buy assets in higher yielding currencies as Euro, Dollar or Sterling. Analysts said that the recovery in the Yen started in Asia after an unexpectedly low Australian inflation number which lowered expectations for a February rate rise by the Reserve Bank of Australia. AUD, with interest rates of 6.25%, is one of the more favoured currencies to buy in carry-trades. AudJpy dropped -2.08% to 94.36 and plunged -1.45% in AudUsd at 0.7807 its one-year biggest fall. In Europe, GbpUsd fell -0.73% to 1.9677 after release of the Minutes of the BoE latest meeting showed a 5-4 vote for this monthâ€™s UK rate rise to 5.25%, compared with Market expectations of a 7-2 vote.
NZD has been very volatile after the Reserve Bank of New Zealand left interest rates steady at 7.25% as expected, but did not comment any further tightening. The NZD initially falls after the RBNZ decision but retraced most of its losses closing at 0.6999 -0.09%
Todays Key Issues:
German January IFO due at 9:00 GMT; Business Climate is expected 109 vs 108.70. Current Assessment is expected 115.1 vs 115.3 and Expectations 103 vs 102.5. Are due at 13:30 GMT; US January 20 Initial Jobless Claims is expected between 305k to 310k vs 290k and Continuing Claims is expected 2475k vs 2530k. Are due at 15:00 GMT; US December Help Wanted Index expected 30 to 31 vs 30 and US December Existing Home Sales expected 6.25M vs 6.28M or -0.2% vs 0.6% (MoM). CAD Bank of Canada Governor David Dodge speaks on Monetary Policy at 18:00 GMT.
The Risk Today:
EurUsd holds below resistance at 1.3050, where a break is required to confirm at least a short-term Euro recovery. In lieu of a 1.3050 break, market would continue to favor a move lower towards 1.2865 and maybe 1.2820 strong support. Initial support is at 1.2930. UsdChf has found support at 1.2376 Tuesday low. While it holds and is building consolidation; possibility exists for a recovery towards key resistance at 1.2550. GbpUsd has marked 1.9916 high on Tuesday. Next, the sell-off has exposed last week low 1.9636. Further downtrend would open 1.9590 (50% retracement of the 1.9261-1.9971 rally) and 1.9510 (61.8% retracement). USDJPY has return below 121.40 key level, putting the bull trend on hold for now. The sharp sell-off overnight may bring more weakness, which would expose 119.10 (38.2% retracement of the 114.66-121.81rally). 121.40 marks initial and trendline resistance.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3290 T ||2.0100 T ||123.25 K ||1.2770 T |
|1.3130 P ||2.0000 T ||122.40 S ||1.2585 M |
|1.3050 S ||1.9850 P ||121.40 T ||1.2550 S |
|1.2970 ||1.9665 ||120.40 ||1.2465 |
|1.2930 M ||1.9636 M ||119.90 T ||1.2430 K |
|1.2900 T ||1.9590 S ||119.10 S ||1.2400 M |
|1.2820 S ||1.9315 S ||118.00 P ||1.2220 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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