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Friday March 16, 2007 - 11:01:19 GMT
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ACM - www.ac-markets.com
Dollar drops broadly on economic concerns
By Jean-Claude Braha - ACM Senior Trader
News and Events:
The Dollar was higher against the Yen Thursday in a small trading range that followed US equities and paid little attention to data. This equities-dollar connection was reflected Thursday afternoon, when former Federal Reserve Chairman Alan Greenspan made comments on the US housing sector that briefly pushed stocks lower, replicated by a dip in the Dollar. Speaking to the Futures Industry Association in Florida, Greenspan warned of a risk that rising defaults in sub-prime mortgage markets could spill over into other economics sectors. He added it was hard to find any evidence about a spillover yet.
US Producer Prices increased by 1.3% (MoM) in February well above the 0.5% consensus. As expected, the main drivers of the increase were food and energy prices. Food increased by 1.9%, mainly due to the frost which is pushing up fresh food prices, and gasoline prices increased by 5.3%. Elsewhere, the collapse in the Empire State index to 1.9 in March, from 24.4, proved the index has been wildly over-optimistic for a long time now. This decline brings it back into line with what other surveys have been telling for months: as manufacturing might be in trouble. Initial Jobless Claims declined by 12k to 318k (March 10). The four-week moving average dropped to 329k from 339k. The report shows companies are holding on to workers to meet demand even as the Housing Market weakens and Factory production cools.
UsdJpy was fairly unchanged at 117.17 after hitting an intraday high 117.78 while the EurJpy was up 0.26% to 155.60. GbpUsd was unchanged 1.9386 recovering from an intraday low of 1.9308.
The Swiss National Bank raised its key rate by 0.25% to 2.25% as expected and left its guidance largely unchanged. The move came a week after the European Central Bank increased its benchmark by 0.25%. UsdChf was up 0.25% to 1.2203.
Today's Key Issues:
US 12:30 GMT: February Consumer Price Index 0.3% vs 0.2% (MoM) and 2.3% vs 2.1% (YoY), CPI ex-food & energy 0.2% vs 0.3% (MoM) and 2.7% unchanged
US 13:15 GMT: February Industrial Production 0.3% vs -0.5%, Capacity Utilization 81.3% vs 81.2%
US 14:00 GMT: March University of Michigan Confidence survey 85 to 93 vs 91.3
The Risk Today:
EurUsd remains bullish following the break through 1.3250 former resistance, keeping the bullish tone from the 1.2865 mid-January low alive. It runs through 1.3260 and 1.3290 trendline resistance. This paves the way for a climb towards key resistance at 1.3370 early December high. Initial support is former trendline resistance 1.3290 followed by 1.3180 to 1.3150 area.
GbpUsd resistance is set at Monday's 1.9435 high. Initial resistance 1.9403 has been cleared and open the way toward 1.9500 trendline. On the down trend, 1.9390 marks initial support. The risk remains for further weakness with the next bear trigger at 1.9188. Then, focus will be on the 1.9146 Pivot support from last November.
UsdJpy recent recovery from 115.15 suggests that further consolidation is in order. As long as the 118.50 (March 12 high) resistance band holds though, focus remains on the downside. A break of 115.76 and the 115.55 would clear the way for a run at the 115.15 trend low from early March.
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. Strong support at 1.2146 (61.8% retracement of 1.1881 â€“ 1.2575 advance) and 1.2103 have been broken and open the way toward 1.1984.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3666 T ||1.9850 P ||119.90 K ||1.2575 S |
|1.3480 S ||1.9750 S ||118.88 M ||1.2342 S |
|1.3370 S ||1.9500 T ||118.50 S ||1.2263 M |
|1.3305 ||1.9410 ||117.00 ||1.2090 |
|1.3290 M ||1.9390 M ||115.15 M ||1.2030 S |
|1.3180 S ||1.9188 S ||114.44 S ||1.1984 P |
|1.3074 S ||1.9146 P ||114.07 S ||1.1881 T |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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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
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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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