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Wednesday February 7, 2007 - 09:56:42 GMT
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ACM - www.ac-markets.com
Yen stays supported ahead of G7 meeting
By Jean-Claude Braha - ACM Senior Trader
News and Events:
The Dollar slipped against the Yen on Tuesday as investors looked ahead to a Group of Seven meeting where finance officials are expected to discuss the Yen weakness. Central banks seem more concern about Yen even if US Treasury Chief suggested the United States was not too concerned by the Yen weakness. US Treasury Secretary Henry Paulson told US lawmakers that the Yenâ€™s value was set by market fundamentals, which suggest the government sees no problem with the Japanese currency low yielding. European officials have been unhappy about the Yen value against most majors because it has made their exports more expensive in Japan. Japanese and US Officials are not supporting this sentiment and analysts believe the meeting on Friday and Saturday will not present a united front on the Yen. In addition, US Treasury official said G7 members would discuss Foreign Exchange rates in a â€śnormal course of businessâ€ť. EurUsd rose 0.4% to 1.2984 in technical rebound after a few tries to break through the 1.2900. EurJpy rose 0.26% to 155.86 as investors reduced some short positions in anticipation of the G7 event. UsdJpy fell -0.12% to 120.07, a three-week low. GbpUsd was up 0.52% at 1.9709.The CHF extended gains against the Dollar after Swiss National Bank board member Philipp Hildebrand said more interest rate hikes are needed if economic growth remains strong. UsdChf fell -0.7% to 1.2398 near its 1.2376 January low.
Today's Key Issues:
AUD Reserve Bank of Australia rate unchanged at 6.25%.
CHF 06:45 GMT: January unemployment rate expected 3.3% unchanged.
GB 09:30 GMT: December Industrial Production expected 0.1% vs 0.5% (MoM) and 0.6% vs 0.8% (YoY). December Manufacturing Production expected 0.1% vs 0.3% (MoM) and 2.1% vs 2.4% (YoY).
US 13:30 GMT: 4Q Non-farm productivity expected 1.8% vs 0.2%. 4Q Unit Labor Cost expected 2.1% to 2.4% vs 2.3%.
US 15:00 GMT: Fedâ€™s Paulson speaks on Financial plan at house Budget Panel.
NZD 21:45 GTMT: 4Q Employment rate expected 0.3% to 0.8% vs -0.4%. 4Q Unemployment rate expected 3.8% unchanged.
The Risk Today:
EurUsd rebounded from last two-day 1.2913 low. Further in this trend, 1.3050 resistance at 1.3057 (38.2% retracement of the 1.3368-1.2865 decline) are still active. A break of Friday's high at 1.3074 is required to confirm a renewed bullish theme. On the downside, only a break of 1.2900 trend support would signal a resumption of the bear trend and open 1.2866 and 1.2820 strong support.
GbpUsd is getting closer to 1.9750 resistance (61.8% retracement of the 1.9917-1.9482 decline); where a break is required confirm a renewed bullish trend. Still on the target is the 1.9917 late January trend high. Minor support is around 1.9590 but only a break of 1.9482 would damage the growing bull trend recovered from last week 1.9482 lows.
UsdJpy is likely to remain vulnerable following the recent sell-off from 121.40. It recently broke 120.38 (23.60% retracement of 114.45-122.20 rally) and may now expose 119.25 (38.2% retracement). The former key breakout level of 119.90 marks the next important support. A move above 121.40 (61.8% retracement of the 122.20-120.10 decline) would confirm the return of the bull channel.
UsdChf following recent sell-off from trend high resistance at 1.2585 has broken 1.2430 support. Further weakness would target 1.2309 (38.2% retracement of 1.1881-1.2574 advance). It would need a break of 1.2376 to end the bull channel from early-December and target the next support 1.2260.
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 ||1.2550 S |
|1.3050 S ||1.9750 S ||121.40 T ||1.2430 K |
|1.2975 ||1.9685 ||120.20 ||1.2410 |
|1.2900 T ||1.9590 M ||120.20 S ||1.2376 S |
|1.2866 M ||1.9512 S ||119.90 K ||1.2309 M |
|1.2820 S ||1.9482 K ||119.23 S ||1.2260 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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