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Thursday February 8, 2007 - 10:15:35 GMT
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ACM - www.ac-markets.com
Bank of England and European Central Bank rates decisionsâ€¦
By Jean-Claude Braha - ACM Senior Trader
News and Events:
The Yen lost ground against the Dollar and Euro on Wednesday on increased expectations that G7 will not take a tough stance on the Japanese currencyâ€™s weakness at this weekend meeting. A senior officer at Japanâ€™s Finance Ministry said the Yen could be discussed at G7 meeting but it was unlikely to be the main subject of the talks. This is following comment earlier this week from US Treasury Secretary Paulson who said the Yenâ€™s value was set by market fundamentals, suggesting that Washington does not have a problem with the Japanese currencyâ€™s weakness. The comments by Paulson and Japanâ€™s finance official stood in strong contrast to those of German Deputy Finance Minister Thomas Mirow who said that discussion of foreign exchange rates will play a key role at the G7. This debate about the Yen and whether there would be or not a statement this weekend, nearly overshadowed the anticipated rate decisions from the Bank of England and European Central Bank due today. BoE is widely expected to leave rates on hold at 5.25%, but following its surprise rate increase last month, dealers believe there is small possibility for another surprise. ECB is also expected to keep interest rates on hold at 3.5% and investors await post-meeting comments from ECB President Trichet for clues on where Euro-zone rates are heading. EurUsd was up 0.29% at 1.3022 turning around 1.3000 key level. GbpUsd was fairly unchanged at 1.9713 not far from last week high 1.9751. UsdChf was also unchanged testing supports at 1.2405. UsdJpy rebounded from 120.03 low to 120.60 close +0.43% and EurJpy strongly recovered +0.73% at 157.04.
Today's Key Issues:
Euro 11:00 GMT: German Factory Orders expected 0.1% vs 1.5% (MoM).
GB 12:00 GMT: Bank of England Rate Decision expected unchanged at 5.25%
Euro 12:45 GMT: European Central Bank Rate Decision expected unchanged at 3.5%.
CAD 13:15 GMT: January Housing Starts expected 215.5k vs 212.6k
CAD 13:30 GMT: December New Housing Price Index expected 0.5% unchanged (MoM).
Euro 13:30 GMT: Trichet speaks at ECB monthly news conference.
US 13:30 GMT: February 3rd Initial Jobless Claims 310k vs 307k.
US 15:00 GMT: December Wholesale Inventories expected 0.6% vs 1.3% and Wholesale Sales expected 1% unchanged.
The Risk Today:
EurUsd Key directional triggers are located at 1.3075 and 1.2866. Initial support however this morning lies at 1.2900 and with the Euro firmer, be on the lookout for a clear break of 1.3075. This would signal scope for stronger intraday gains.
GbpUsd formed resistance at 1.9750 (61.8% retracement of the 1.9917-1.9482 decline), where a break is required confirm a renewed bullish trend. The target is still 1.9917 late January trend high. Last week's 1.9482 marks key support and initial support is 1.9590 but only a break of 1.9482 would damage the growing bull trend recovered from last week 1.9482 lows.
UsdJpy is showing recovery sign, but it will take a rise above the 121.40 (61.8% retracement of the 122.20-120.10 decline) to reasonably confirm a return of the broader bull trend. On the downside, initial support has been defined at 119.96 just over 119.90 last year former resistance level.
UsdChf recent sell-off from trend high resistance at 1.2585 was sharp, but so far it's holding above the 1.2376 reaction low from late January. Only a break there would damage the broader bull trend and target 1.2309 (38.2% retracement of 1.1881-1.2574 advance). Monday's 1.2520 marks initial resistance for the short term.
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 ||1.2520 M |
|1.3000 ||1.9675 ||121.20 ||1.2475 |
|1.2900 T ||1.9590 M ||120.20 S ||1.2376 S |
|1.2866 K ||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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