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Tuesday March 6, 2007 - 11:14:14 GMT
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ACM - www.ac-markets.com
Yen rose for the third day on pullback in risks
By Jean-Claude Braha - ACM Senior Trader
News and Events:
The Yen climbed against the Dollar on Monday for the third consecutive session as investors watching falling global stock prices continued to unwind risky trades funded by borrowing cheaply in the Japanese currency. UsdJpy sank below 116 for the first time since early December due to the shift out of risk from last week and following the biggest drop in US stock since 2003. Analyst said further Dollar weakness versus the Yen tendency is likely to depend on this week releases in US economic data. UsdJpy was down -0.44% to 115.61 after dropping to a three-month low of 115.15.
Also EurJpy made its biggest weekly percentage loss since August 2003 after hitting a record high near 160 in February. EurJpy fell as low as 150.75, its lowest since late November, and ended -1.86% to 151.23. GbpJpy sank -2.24% to 221.93 after hitting a five-month low of 221.12. In the past, the Sterling had been one of the biggest beneficiaries of the carry-trade financed by the Yen of the Swiss Franc. Meanwhile, the EurUsd was down -0.8% to 1.3086 mostly weighed by the Euro losses against the Yen. UsdChf was up 0.33% to 1.2205.
Analysts didn't see much importance to the drop in the ISM non-manufacturing index to 54.3 in February, its lowest level since April 2003, from 59.0. Consensus was 57.5. New orders fell more modestly to 54.8, from 55.4, while the employment index actually improved to 52.2, from 51.7.
As global stock markets may continue the ongoing sell-off, market volatility would likely keep rising in the Currency Market; especially given central bank policy meetings this week in Australia, Britain, Canada, Euro-zone and New Zealand.
Today's Key Issues:
Euro 10:00 GMT: 4Q Euro-zone Gross Domestic Product seasonally adjusted 0.9% (QoQ) and 3.3% unchanged. 4Q Gross Fixed Capital Spending 1.2% vs 0.6% (QoQ), 4Q Government Expenditure 0.4% vs 0.6%, 4Q household Consumption 0.5% vs 0.7%.
Euro 10:00 GMT: January Euro-zone Retail Sales -0.4% vs 0.3% (MoM) and 1.3% vs 2.1% (YoY).
GB 11:00 GMT: February BRC Retail Sales Monitor 2.3% vs 3.1% (YoY)
US 13:30 GMT: 4Q Non-Farm Productivity forecast 1.7% vs 3%, 4Q Unit Labor costs 3.2% vs 1.7%
CAD 13:30 GMT: January Building Permits 1.7% vs -7.8% (MoM)
CAD 14:00 GTM: Bank of Canada Rate Decision 4.25% unchanged
US 15:00 GMT: January Factory Orders -4% vs 2.4% and Factory Inventories 0.2% vs 0.1%
US 19:00 GMT: Fed's Bernanke speaks on Government Sponsored Enterprises, Hawaii
AUD 22:30 GMT: Reserve Bank of Australia Rate Decision 6.25% unchanged.
The Risk Today:
EurUsd broke down 1.3150 support; with further weakness, a break of 1.3074 would confirm the short term negative trend and expose further downside toward 1.3024. There market would target 1.2990 (61.8% retracement of the 1.2865 to 1.3191 advance). On the Upside, market looks at 1.3250 (76.4% retracement of the 1.3368-1.2865 decline) and 1.3290 trendline resistance. Initial resistance is located at 1.3212 followed by 1.3260 late Feb high.
GbpUsd is likely to remain under pressure having cleared the base of 1.9402 â€“ 1.9750 trading range. The break lower has opened 1.9146 target, late November low. On the upside, initial resistances are 1.9344 and 1.9403. Minor support holds at 1.9220.
UsdJpy is set to remain heavy following the sharp losses over the past few days. The focus is now on the 114.38, early December low. While it is tough to identify resistance with these types of moves, initial resistance is expected at 117.44. But there, only a rebound above 118 pivot point would end the downtrend.
UsdChf has found support at 1.2110. A break of resistance at the 1.2263, early March high, however is required to offset downward pressure for now. Until then, we note that there is little support below the current 1.2110 low until 1.2043 (76.4% retracement of the 1.1879-1.2575 rise). This would expose 1.1980 December low.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3364 T ||1.9750 S ||119.90 K ||1.2575 S |
|1.3290 T ||1.9403 S ||118.00 P ||1.2477 S |
|1.3250 S ||1.9344 M ||117.44 S ||1.2363 M |
|1.3115 ||1.9265 ||116.45 ||1.2220 |
|1.3074 S ||1.9220 M ||114.38 S ||1.2110 S |
|1.2990 S ||1.9188 S ||114.07 M ||1.2030 T |
|1.2900 T ||1.9146 P ||111.96 S ||1.1980 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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- 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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