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Monday February 19, 2007 - 10:27:19 GMT
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ACM - www.ac-markets.com
Forex market focus on BoJ rate decision...
By Jean-Claude Braha - ACM Senior Trader
News and Events:
The Dollar was weaker against the Euro and Yen on Friday as investors closed positions ahead of a three-day break; US financial markets are closed on Monday in observance of Presidentsâ€™ Day. The Dollar fell during US session after data showed a sharp decline in US Housing Starts last month and an unexpectedly decline of the University of Michigan Consumers survey.
Fridayâ€™s decline in US Consumer confidence corrected part of the recent excessive optimism. The Michigan confidence index declined to 93.3 in February from 96.9. The market had expected the index to be broadly unchanged. Expectations slipped to 83.7 from 87.6, while the present situation index dropped to 108.3 from 111.3.
Meanwhile, the Producer Price Index fell by 0.6% in January, pulled down by a 13% decline in gasoline prices, matching economistsâ€™ forecasts after rising 0.9% in December and 1.8% in November. The Core PPI, which excludes food and energy prices, increased 0.2% in line with forecasts. Also, Housing Starts dropped to a 9-year low of 1408k annualized in January. This January number is all weather-related as well as December number of 1643K. A simple average of the two months â€ś1525kâ€ť give a much better picture in comparison with building permits down to 1568k in January.
The Marketâ€™s main focus at the moment is whether the Bank of Japan will raise the overnight rate to 0.5% from a current 0.25% at its two-day policy meeting ending on Tuesday. Market players see about a 50/50 chance of a BoJ rate raise this week. Last week UsdJpy and GbpJpy were down -1.87%; the biggest one-week drop since May.
Today's Key Issues:
JPN 19 â€“ 20 February Bank of Japan Policy Board Meeting
US Markets closed for Presidentsâ€™ Day
CAD 13:30 GMT: December International Securities Transactions expected CAD 1B to 6B vs CAD 10.99B
CAD 13:30 GMT: December Wholesale Inventories expected 0.3% vs 0.9%
CAD 13:30 GMT: December Wholesale Sales expected 0.3% to 1.1% vs 0.1% (MoM).
The Risk Today:
EurUsd is consolidating just below resistance at 1.3176 (61.8% retracement of the 1.3268 to 1.2865 decline). Initial support remains at last 1.3050 low, but only a break of the 1.2900 would jeopardize the potential for a move above 1.3176 and toward the 1.3298 early January high.
GbpUsd has been range bound for the past couple of weeks between the 1.9750 early February high and the 1.9403 last week low. Only a breakout from this range would mark the next key directional trend. A break of 1.9750 resistance (61.8% retracement of the 1.9917-1.9482 decline) is required to confirm the return of the bull trend.
UsdJpy is likely to remain weaker having cleared key support at 119.90 last week and confirming a double top reversal pattern. Further weakness below 119.23 (38.2% retracement of the 114.43-122.20 rally) would the exposes the 118 pivot point. 119.90 marks now initial resistance.
UsdChf maintains a bearish tone following the recent break of 1.2376 former support, confirming the head-and-shoulders top. Further weakness below the 1.2376 will open the door to 1.2309 (38.2% retracement of 1.1881-1.2574 advance). The next important support is the 1.2260. Resistance is at 1.2480, Wednesday's high.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3364 T ||1.9850 P ||122.20 S ||1.2770 T |
|1.3290 T ||1.9750 S ||121.00 M ||1.2575 S |
|1.3176 S ||1.9604 M ||119.90 K ||1.2376 S |
|1.3145 ||1.9515 ||119.55 ||1.2340 |
|1.3050 M ||1.9482 K ||119.23 S ||1.2309 M |
|1.2900 T ||1.9403 S ||118.00 P ||1.2260 S |
|1.2866 K ||1.9315 S ||117.44 S ||1.2030 T |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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Amazing Trader EVENT RISK Calendar:
Wed 18 Oct /ul>
12:30 US- Housing Starts & Permits
14:30 US- EIA Crude
Thu 19 Oct
01:30 AU- Employment
08:30 GB- Retail Sales
12:30 US- Weekly Jobless
Fri 20 Oct
12:30 CA- Retail Sales & CPI
14:00 US- Existing Homes Sales
John M. Bland, MBA
- POTENTIAL PRICE RISK: HIGH Tue-- 08:30 GMT GB- CPI top tier confirmation of Inflation.
- POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT DE- ZEW Survey second most important German monthly Survey.
- POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT EZ- final HICP revision to flash report. Revisions are usually minor.
- POTENTIAL PRICE RISK: Medium Tue-- 13:15 GMT US- Industrial Production. Top output indicator.
- POTENTIAL PRICE RISK: Medium Wed-- 12:30 GMT US- Housing Starts and Permits revision to flash report. Useful housing leading indicator.
- POTENTIAL PRICE RISK: Medium Wed-- 14:30 GMT US- EIA Crude. Top WTI inventory measure.
- POTENTIAL PRICE RISK: Medium Thu-- 01:30 GMT AU- Employment. Top economic indicator.
- POTENTIAL PRICE RISK: Medium Thu-- 02:00 GMT CN- GDP. Top economic indicator.
- POTENTIAL PRICE RISK: HIGH Thu-- 08:30 GMT GB- Retail Sales. Top consumption indicator.
- POTENTIAL PRICE RISK: Medium Thu-- 12:30 GMT US- Weekly Jobless. Employment Indicator.
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