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Monday January 29, 2007 - 11:21:43 GMT
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ACM - www.ac-markets.com
Dollar rises after strong US data and coming FOMC meeting.
By Jean-Claude Braha - ACM Senior Trader
News and Events:
The Dollar advanced broadly on Friday, as generally robust data from the US Housing and Manufacturing sectors provided strong further support. That reinforced the view the Federal Reserve may hold interest rates steady at 5.25% this year, and not cut them as expected last year. The Dollar rose after a government report showed that while new-home sales posted their biggest drop in 16 years in 2006, sales picked up in December. The rebound in new homes sales to 1.112m in December, from 1.069m the month before, looks to be largely, if not entirely, due to the unseasonably warm weather last month. Consensus was 1.052m. The number of homes for sale fell again, helping to bring the monthly supply of homes on the market down to 5.9, from 6.1 in November and 7.0 in October. This week, markets is looking for strong US economic data and events led by FOMC meeting, non-farm payrolls report and Manufacturing Survey. That could help determine where US interest rates are heading this year. The Yen rallied last week on speculation the weak Japanese currency would be discussed at Group of Seven meeting. Any sharp appreciation of the Yen could erase latest dayâ€™s profits from carry-trades, where investors borrow in low-yielding currencies to buy assets in countries with higher interest rates. Also Japanese Core Consumer Prices rose 0.1% in December, suggesting Japan in struggling to shake off a decade of deflation and adding to speculation the BoJ may keep rates at 0.25% at its February meeting. EurUsd was barely unchanged -0.15% at 1.2916. UsdJpy was unchanged at 121.54 and EurJpy was down -0.21% at 156.98. Elsewhere, UsdChf rose 0.44% to 1.2537, while GbpUsd slipped -0.3% at 1.9594.
Todays Key Issues:
GBP 11:00 GMT: CBI Distributive Trades survey â€“ Expected February 6 vs 4. CBI Distributive Trades Survey â€“ Realized January 20 vs 25.
CAD 13:30 GMT: manufacturing Conditions Survey 1Q expected -2 vs -5. Business conditions Orders expected -7 vs -13.
EUR 16:00 GTM: Euro-zone Finance Ministers meeting in Brussels.
JPY 23:30 GMT: Jobless Rate December expected unchanged at 4%. Overall Household Spending expected -1.2% vs -0.7% (YoY). Personal Income December expected 5% vs 1.7% (YoY). December Industrial Production expected 0.4% vs 0.8% (MoM) and 4.3% vs 4.9% (YoY).
The Risk Today:
EurUsd With the correction from the 1.2866 to 1.3045 having held below the 1.3050 resistance, the EURUSD bear trend has resumed. Further downtrend will push through 1.2900 and 1.2866 supports. A break there will make way for a run at 1.2820 (61.8% retracement of the 1.2483-1.3368 rise). Initial resistance is 1.3050.
GbpUsd has been under pressure from the 1.9917 trend high. Solid sell off has made the way down through 1.9590 former support. The sell-off brings the 1.9512 level into focus (61.8% retracement of the 1.9261-1.9971 rally). Mild resistances are formed at 1.9736 and 1.9590 former supports.
UsdJpy the bull trend has resumed once again following the overnight break to new highs. The focus is now on 122.40 (61.8% retracement of the 135.18-101.67 decline) and from a medium-term perspective, the trend remains on course for 125.00. Key support has been defined at 121.40.
UsdChf broke out from last two-week consolidation. The 1.2430 key support provided a base for the rise through 1.2568 Fridayâ€™s high. This would open the way through 1.2550 resistance. Further resistance is holding 1.2585 level.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3290 T ||1.9850 P ||125.00 T ||1.2770 T |
|1.3130 P ||1.9736 M ||123.25 K ||1.2585 M |
|1.3050 S ||1.9590 M ||122.40 S ||1.2550 S |
|1.2915 ||1.9580 ||122.00 ||1.2550 |
|1.2900 T ||1.9560 M ||121.80 M ||1.2430 K |
|1.2866 M ||1.9512 S ||121.40 T ||1.2400 M |
|1.2820 S ||1.9315 S ||119.90 S ||1.2260 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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