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Monday March 26, 2007 - 09:31:35 GMT
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ACM - www.ac-markets.com
Dollar extends gains after good US Housing data
By Jean-Claude Braha - ACM Senior Trader
News and Events:
The Dollar firmed against the Euro on Friday as a surprise jump in US existing Home Sales tempered the case for lower benchmark interest rates by the middle of the Year. It also recovered losses against the Yen when data showed the first annual rise in Japanese land prices in 16 years. The US report, which showed sales of previously owned homes beat forecast and rose by 3.9% last month, eased fears about the health of the housing sector. The data helped the Dollar wipe out losses suffered early last week when Federal Reserve adopted a more neutral monetary policy stance at its latest meeting, suggesting to some investors that a rate cut was imminent. EurUsd went down -0.36% to 1.3285 from Thursday two-year high 1.3412 following the Fed's policy shift. GbpUsd was down -0.14% to 1.9620, still up 1.1% last week. The UsdJpy was unchanged at 118.11, ending the week up 1.54%. The Yen got light support overnight when Japanese Finance Minister Koji Omi told a news conference that recent rises in Japan's land prices reflected a strengthening economy.
Last week, the Fed held the overnight Federal funds rate unchanged at 5.25% at its policy meeting on Wednesday, while the European Central Bank is expected to lift rates again this year from the current 3.75%. Analysts said there is very little reason to buy the Dollar at the moment and that investors remain concerned about problems in the US sub-prime sector and fears that the turmoil could spill over other sectors of the economy.
Data this week might provide some clues; starting with a report on US New Home Sales today, watching Durable goods Orders on Wednesday for signs of overall economic strength and looking at the release of Germany's Ifo Business Sentiment Index on Tuesday.
Today's Key Issues:
US 14:00 GMT: February New Home Sales 950k to 985k vs 937k or 5.1% vs -16.6% (MoM)
EUR 15:00 GMT: European Central Bank's Liebscher speaks in Vienna
GB 23:01 GMT: Home track House Prices not seasonally adjusted previously 0.7% (MoM) and 6.4% (YoY)
JPN 23:50 GMT: February Corporate Service Price 0.5 to 0.6% vs -0.3% (MoM) and 0.6% unchanged (YoY)
The Risk Today:
EurUsd The outlook may turn neutral following the break of 1.3270 (last Tuesday's reaction low). Further weakness would pave the way for a decline towards 1.3260 and even 1.3200 (50% retracement of the rally from 1.3072 to 1.3412). A break there would open the risk down toward 1.3180. On the topside, initial resistance is at 1.3343
GbpUsd remains positive following the push through last week's 1.9500 high and the 1.9517 former resistances. Trendline 1.9675 resistance marks initial resistance. Over that, the focus will be 1.9750 resistance, early February high. Minor supports are around 1.9555 and 1.9517 former resistance.
UsdJpy continues its choppy consolidation phase, but as long as the 118.50 to 118.88 range resistance holds; 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 has probed resistance at 1.2218 (the overnight high, key and pivotal resistance), a clear break of this level is required to suggest scope for gains towards 1.2263. There is still a possibility that the correction is complete and we are likely to see prices move lower once again towards key support at 1.2030. There's little support below there till the 1.1881 early December low.
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 |
|1.3343 M ||1.9675 T ||118.50 S ||1.2218 P |
|1.3275 ||1.9625 ||118.10 ||1.2195 |
|1.3260 S ||1.9555 M ||117.17 S ||1.2030 S |
|1.3200 S ||1.9188 S ||115.15 M ||1.1984 P |
|1.3180 S ||1.9146 P ||114.44 S ||1.1881 T |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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Amazing Trader EVENT RISK Calendar:
Mon 18 Dec
10:00 EZ- final HICP
Tue 19 Dec
09:00 DE- IFO Survey
13:30 US- Housing Starts/Permits
13:30 US- Current Account
Wed 20 Dec
15:00 US- Existing Homes Sales
15:30 US- EIA Crude
Thu 21 Dec
03:00 JP- BOJ Decision
13:30 CA- CPI & Retail Sales
13:30 US Weely Jobless
13:30 US- GDP
Fri 22 Dec
09:30 US- GB- GDP
13:30 US- core PCE Deflator & Presonal Income
15:00 US- New Homes Sales
15:00 US- final University of Michigan
17:00 US- early Closes
Mon 25 Dec
00:00 Christmas Holidays
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John M. Bland, MBA
- POTENTIAL PRICE RISK: Medium Mon--10:00 GMT-- EZ- final November HICP. flash data are rarely changed.
- POTENTIAL PRICE RISK: HIGH- Medium Tue --09:00 GMT-- DE- IFO Survey. Key report but usually not a market-mover
- POTENTIAL PRICE RISK: HIGH- Medium- Tue --13:30 GMT-- US- Housing Starts and Permits. Leading indicators of activity
- POTENTIAL PRICE RISK: HIGH-Medium- Wed --15:00-- US- Existing Homes Sales. Top Housing statistic
- POTENTIAL PRICE RISK: Medium- Wed --15:30-- US- EIA Crude
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