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Thursday March 15, 2007 - 12:12:39 GMT
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ACM - www.ac-markets.com
Dollar, as well as Euro and Gbp, gained against Yen, boosted by US lower deficit
By Jean-Claude Braha - ACM Senior Trader
News and Events:
The US current account deficit shrank to $195.8B, or 5.8% of GDP, in 4Q from $229.4B in 3Q. The $34B improvement last quarter was principally due to a $23B decline in the trade deficit, much of which was thanks to the lower cost if imported oil. The income balance, which swung from a deficit of $5.5B in 3Q to a surplus of $3B in 4Q, has been gradually deteriorating over the past few years as the US net external debt deficit grew larger. Analysts suspect this latest improvement is just a temporary one and that the income balance will slip back into deficit this year. The news helped boost the dollar to session high against the Yen on Wednesday. Analysts also said the smaller current account was just one of many factors traders were looking at to anticipate the Federal Reserve next move on interest rates. But Consumer Price Index, due on Friday, is still going to be more important for futures interest rate moves in the second half of the year.
The Dollar rebounded against the Yen on Wednesday in choppy trading after US stocks recovered, reversing early declines. However, Dealers remain cautious amid worries that trouble in the US sub-prime market could spread to other sectors of the economy.
EurUsd raised 0.34% 1.3233 after reaching intraday 1.3246 high. Sterling erased Tuesday loss and GbpUsd gained 0.51% to 1.9385. Against the Yen, UsdJpy rose 1.08% to 117.28 and EurJpy was up 1.42% to 155.20 while GbpJpy extended 1.59% to 227.34. The Swiss franc, currency with the lowest interest rates after the Yen in the developed world, has been fairly strong against Dollar as the concerns about US sub-prime mortgages fanned risk aversion and prompted investors to sell UsdChf these last two months.
Today's Key Issues:
CHF 8:30 GMT: Swiss National Bank raise rate to 2.25%
Euro 9:00 GMT: ECB's Garganas testifies in Greek Parliament
Euro 10:00 GMT: Euro-zone Consumer Price Index 0.3% to 1.8% (MoM) and 1.8% unchanged (YoY)
NZD 11:01 GMT: February ANZ Business Purchasing Managers Index previously 56
CAD 12:30 GMT: January Manufacturing Shipments -0.7% vs 1.7%
US 12:30 GMT: March 10th Initial Jobless Claims 328k unchanged
US 12:30 GMT: February Producer Price Index 0.4% vs -0.6% (MoM), March Empire manufacturing previously 24.4
US 16:00 GMT: March Philadelphia Fed Index 4.0 vs 0.6
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 resistance is set at Monday's 1.9435 high. Before that, initial resistance 1.9403 should cap again the upside for the near term. On the down trend, lower than 1.9220 initial support, the risk remains for further weakness with the next bear trigger at 1.9188. Focus remains on the 1.9146 Pivot support from last November.
UsdJpy recovered from Tuesday dive through 116.43 (61.8% of 115.15-118.50). Initial resistance stays at 118.50 Monday's high followed by 118.88 resistance. The down trend is put on hold for now, but a break of 115.55 and then the 115.15 trend low from early March, would clear the way for a run at the 114.43 early December low.
UsdChf is likely to remain under pressure for now following the recent sharp sell-off from the 1.2356 last Friday high. The bearish theme remains clearly intact and any corrective rebound is likely to be capped by minor resistance at 1.2263. A break of 1.2103 would open 1.1984. Market has strong support at 1.2146 (61.8% retracement of 1.1881 â€“ 1.2575 advance).
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 |
|1.3205 ||1.9325 ||117.25 ||1.2190 |
|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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