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Wednesday March 14, 2007 - 10:39:59 GMT
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ACM - www.ac-markets.com
Yen strengthened as investors pared risk
By Jean-Claude Braha - ACM Senior Trader
News and Events:
The Yen rose broadly for the second consecutive session on Tuesday as Investors unwound risky trades due to growing concerns that turmoil in the US sub-prime mortgage market may impact the broader economy. Strength in currencies with low interest rates suggested that the shakeout started two weeks ago in carry-trades may not be over. The Yen was also boosted by comments from Asian Development Bank President Haruhiko Kuroda, who said a real scale unwinding of Yen carry-trades has yet to come. UsdJpy was down -1.32% to 116.03. It also posted sharp gains against Sterling, New Zealand and Australian Dollar. US market worries had triggered the second biggest sell-off of the year in US Stocks and dealers said that weakness in Asian Stock Markets would further boost the Yen.
US Retail Sales increased by just 0.1% (consensus 0.3%), with the January figure revised down by to 0.2%. These weaker than expected figures may be a reflection that February's winter storms and unseasonably clod weather had a bigger effect on consumer spending. Meanwhile in Europe, the rise in the ZEW survey of investor sentiment for Germany has been encouraging given the recent fall in Global Equity Market. The headline expectations index raised for a third consecutive month, from +2.9 in February to +5.8 in March, its highest level in 8 months. EurUsd was fairly unchanged at 1.3188 while EurJpy slid -1.34% to 153.02, moving away from February's record high near 160. GbpJpy dropped -1.52% to 223.79, while NzdJpy plunged -3.04% to 79.50 and AudJpy -1.88% to 90.68.
Today's Key Issues:
GB 9:30 GMT: February 9th jobless Claims expected -8.0k vs -13.5k and Claimant Count Rate 2.9% unchanged
CHF 10:00 GMT: March ZEW survey expectations previously -17.3
Euro 10:00 GMT: 4Q Euro-zone employment previously 0.4%
US 12:30 GMT: 4Q Current Account Balance -$203B to -$204B vs -$225.6B,
February Export Prices Index 0.2% vs 0.3%February Import Price Index 0.8% vs -1.2% (MoM)
CAD 12:30 GMT: January New Motor Vehicle Sales -4.0% to 5.6%, 4Q Capacity Utilization 83.5% vs 84.2%
AUD 23:30 GMT: March Consumer Inflation Expectation previously 23.3%
The Risk Today:
EurUsd remains constructive holding above support at 1.3074, keeping the bullish tone from the 1.2865 mid-January low alive. A move above 1.3189 (0.618 of 1.3261-1.3072) has put this bull trend on better footing for a run at the 1.3260 late February trend high. On the downside, an unlikely break of 1.3074 would open the way toward 1.3024. There market would target 1.2990 (61.8% retracement of the 1.2865 to 1.3191 advance).
GbpUsd formed a spike high on Monday below resistance at 1.9487 (61.8% retracement of the 1.9674-1.9184 decline) but remains heavy after the recent break of the bottom of the large trading range at the 1.9402 Mid-February low. The recent decline from Monday's 1.9435 high is focusing at the 1.9183 trend low from early March. Focus remains on the 1.9146 Pivot support from last November. Initial resistances 1.9403 resistance should cap again the upside for the near term.
UsdJpy has reversed recent recovery from last week low 115.15 and is now heading down to this level again. A break of 115.15 would be the clear signs of the downtrend return and open the way toward 114.44 early December low. Further support holds 114.07 (61.8% retracement of 109.04 â€“ 122.20 advance).
UsdChf is likely to remain under pressure for now following the recent sharp sell-off from the 1.2356 last Friday high. The focus shifts to strong support at 1.2109, which also marks the bear trigger toward 1.2030 trend support. For now, market has strong support at 1.2146 (61.8% retracement of 1.1881 â€“ 1.2575 advance). On the upside, a break of 1.2342 (50% retracement of the 1.2575-1.2108 decline) would open the way toward 1.2438, Feb 22 high.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3290 T ||1.9850 P ||120.00 T ||1.2575 S |
|1.3260 M ||1.9750 S ||119.90 K ||1.2438 M |
|1.3250 S ||1.9403 S ||118.88 M ||1.2342 S |
|1.3195 ||1.9230 ||115.90 ||1.2160 |
|1.3074 S ||1.9220 M ||115.15 M ||1.2146 S |
|1.2990 S ||1.9188 S ||114.44 S ||1.2109 S |
|1.2900 T ||1.9146 P ||114.07 S ||1.2030 T |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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