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Thursday February 1, 2007 - 11:09:18 GMT
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ACM - www.ac-markets.com
US Federal Reserve kept interest rates steady.
By Jean-Claude Braha - ACM Senior Trader
News and Events:
The Dollar fell against the Euro and Yen on Wednesday after the Federal Reserve kept interest rates steady, as expected, but said US price pressures and economic growth were likely to moderate. The Fedâ€™s policy statement after the meeting didnâ€™t confirm dealersâ€™ expectations which were hoping for a more positive comment on the possible inflationary impact from recent solid economic data such as latest US growth 4Q report. US 4Q GDP advance is 3.5% vs prior 2% and expectation of 3%. The Fed, which had held the benchmark fed funds rate at 5.25% since August 2006, said recent data suggest â€śsomewhat firmerâ€ť growth and noted signs of stabilization in the US housing market. Analyst said such comment would be seen as a â€śwarming signâ€ť that the Dollarâ€™s strong performance so far this year may be about to end. In Addition, the National Association of Purchasing Management Chicago said business activity in January was the lowest monthly reading since April 2003 at 48.8 vs 51.6. EurUsd extended gains 1.3038 +0.46%. UsdJpy was down -0.77% at 120.76, extending losses that began after US Treasury Secretary Henry Paulson said he is watching the value of the Yen â€śvery carefullyâ€ť. EurJpy was down -0.32% at 157.27. Yen remains a key theme ahead of next weekâ€™s Group of Seven finance ministers meeting in Germany.
Today's Key Issues:
US 13:30 GMT: Personal Income December expected 0.5% vs 0.3%, Personal Spending 0.7% vs 0.5%, Personal Consumption Expenditure (PCE) December Core expected 0.2% vs 0% (MoM) and previously 2.2% (YoY), January 27th Initial Jobless Claims is expected 315K vs 325k.
US 15:00 GMT: December Pending Home Sales expected 0.8% vs -0.5% (MoM), January ISM Manufacturing expected 51.4 to 51.9 vs 51.4.
Euro 16:30 GMT European Central Bankâ€™s Trichet speaks at African Bank Conference.
The Risk Today:
EurUsd rebound from 1.2866 is encouraging for aspiring EURUSD bulls, but only a recovery over 1.3050 (38.2% retracement of the 1.3368 to 1.2865 decline) would relieve the broader bearish threat. Weakness below 1.2866 would expose 1.2820 (61.8% retracement of the 1.2483-1.3368 advance).
GbpUsd breached 1.9512 (61.8% retracement of the 1.9262 to 1.9917 advance) before bouncing sharply on 1.9482 Wednesday's low. However, it would minimally take a move through 1.9736, a small reaction high from last Thursday and 50% retracement of the 1.9917 to 1.9549 decline to offset the immediate bear threat.
UsdJpy has break down, away from the 122.40 retracement of the 135.18 to 101.67 decline, but as long as supports at 120.20 (Jan 25 low) and 119.90 (former resistance) remain intact, a bullish tone is advised.
UsdChf The sharp sell-off in UsdChf has defined resistance at 1.2575, Wednesday's high and exposed support at 1.2375. Note that the Dollar is currently pressuring trendline support at 1.2430; a break would further undermine the Dollar. Gains above 1.2575 and 1.2585 are required to reinstate a bullish theme.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3290 T ||1.9917 T ||123.25 K ||1.2770 T |
|1.3130 P ||1.9850 P ||122.40 S ||1.2585 M |
|1.3050 S ||1.9736 M ||121.40 T ||1.2550 S |
|1.3020 ||1.9645 ||120.65 ||1.2440 |
|1.2900 T ||1.9590 M ||120.65 M ||1.2430 K |
|1.2866 M ||1.9512 S ||120.20 S ||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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