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Tuesday March 20, 2007 - 09:40:40 GMT
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ACM - www.ac-markets.com
Bank of Japan left monetary policy unchanged and rate at 0.5%
By Jean-Claude Braha - ACM Senior Trader
News and Events:
The Yen hit a 2 Â½ week low against the Euro and dipped against the Dollar on Monday as a rash of corporate merger news bolstered global stock markets and renewed investors' appetite for risk. EurJpy climbed 1.09% to 156.58 after hitting a 2 Â½ week peak at 156.67. UsdJpy was up 1.13% to 117.63. In recent weeks, the Japanese currency had gained as stock prices fell, which caused investors to shy away from risky carry trades, which are often financed with Yen. Yesterday, China delivered a surprise interest rate rise designed to trim credit and investment growth in the world's fourth-largest economy. The Yen often trades as a proxy for the tightly-controlled Chinese Yuan. In addition, The Bank of Japan left monetary policy unchanged at a board meeting early today, keeping the overnight call rate target at 0.5% as widely expected by financial markets. The BoJ raised its key policy rate to 0.5% from 0.25% last month, judging that the economy would stay on track for steady growth with prices seen in an uptrend.
The Dollar eased a touch after a decline in NAHB housing market Index to 36 against 40, expectation was 38.
The high-yield Australian Dollar climbed near its highest level in a decade, while the New Zealand Dollar also gained and the Swiss franc weakened. AudUsd rose 0.84% to 0.7955 after hitting 0.8034 10-years high.
Analysts said the upcoming Federal Reserve meeting is not likely to erode the appeal of carry-trades for Now. Bank of Japan left rate unchanged and Federal Reserve is seen also keeping rate unchanged on Wednesday.
Today's Key Issues:
JPN: Bank of Japan left rate unchanged at 0.5%
CHF 09:15 GMT: February Producer & Import Prices 0.1% vs -0.2% (MoM) and 2% vs 2.2% (YoY)
GBP 09:30 GMT: February Consumer Price Index 0.3% vs -0.8% (MoM) and 2.7% unchanged (YoY) Core CPI 1.7% vs 1.6% (YoY) Retail Price Index 0.5% vs -0.5% (MoM) and 4.3% vs 4.2% (YoY)
CAD 11:00 GMT: February Consumer Price Index 0.3% vs 0.1% (MoM) and 1.6% vs 1.2% (YoY) February Bank of Canada Consumer Price Index Core 0.2% vs 0.1% and 2.1% unchanged
USD 12:30 GMT: February Housing Starts 1440k vs 1408k Building Permits 1556k vs 1568k
The Risk Today:
EurUsd bull trend from 1.2865 remains intact with little resistance till the broader resistance 1.3370 set back in early December. Former 1.3290 resistance marks initial support before intraday support at around 1.3260. A break there would open the risk down toward 1.3180.
GbpUsd remains positive following the push through last Monday's 1.9435 high and 1.9487 Fibonacci barrier. This clears the way for a run through 1.9500 trendline and a minor resistance around 1.9517, late February low. Mild support is around last Wednesday's 1.9375 high. 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 continues its choppy consolidation phase, but as long as the 118.50 to 118.88 range resistance holds, we will keep our focus 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 after the break of former support at 1.2146 (61.8% retracement of 1.1881 â€“ 1.2575 advance). A return below 1.2104 would expose the 1.1984. There's little support below there till the 1.1881 early December low. Next strong support is 1.1984. Initial resistance is 1.2217 last Thursday high.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3666 T ||1.9850 P ||119.90 K ||1.2342 S |
|1.3480 S ||1.9750 S ||118.88 M ||1.2263 M |
|1.3370 S ||1.9500 T ||118.50 S ||1.2217 M |
|1.3305 ||1.9490 ||117.75 ||1.2135 |
|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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AA JP- Bank of Japan
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A 09:00 EZ- flash HICP/GDP
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