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Friday April 20, 2007 - 09:57:22 GMT
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ACM - www.ac-markets.com
Yen drifts higher on China possible interest hike
By Jean-Claude Braha - ACM Advanced Currency Markets, Geneva, Switzerland
News and Events:
The Yen edged higher on Thursday as worries about a possible near-term interest rate hike in China to slow its red-hot economy prompted investors to unwind trades funded by low rates in the Japanese currency. Any slowdown in China as a result of higher rates could crimp demand for emerging market and other risky assets that have supported the Carry-trade, a strategy in which investors borrow cheaply to buy higher-yielding assets or currencies. Data showed that China's economy grew at an 11.1% annual pace in the 1st quarter and March inflation rose above the Central bank's 3% comfort level. The Yen gains against high-yielding currencies such as US Dollar, Australian and New Zealand Dollar. UsdJpy went down to 117.61 low yesterday before trimming to 118.43 close. EurJpy closed to 161.37 after posting 159.62 intraday low. AudYen dropped to 97.45 low before cutting losses to 98.89. It was reversing from Tuesday decade high 100.04.
GbpJpy traded 237.28 at close reversing form intraday low 235.25. Sterling rose Tuesday to 239.44 high against the Yen. GbpUsd was down 0.26% to 2.0036 after hitting a 26-year peak on Wednesday at 2.0133. EurUsd consolidate near 2-year high 1.3638 after notching 1.3561 yesterday low. EurUsd is still in sight of the record high at 1.3666 set in December 2004.
Today's Key Issues:
CHF 7:15 GMT: March Producer & Import Prices 0.3% unchanged (MoM) and 2.3% vs 2.2% (YoY)
GB 8:30 GMT: March Retail Sales 0.5% vs 1.4% (MoM) and 4.7% vs 4.9% (YoY)
CAD 12:30 GMT: February Retail Sales -0.3% vs -0.2% (MoM) and Ex-autos 0.3% unchanged (MoM)
US 16:00 GMT: Treasury Secretary Paulson keynote speech at China Conference
US 19:50 GMT: Fed's Mishkin speaks on US economic outlook.
The Risk Today:
EurUsd continues to narrow the distance toward the 1.3666 all-time high from December 2004. Initial support comes from Monday's 1.3525 low, but only a break of the 1.3482 support would damage the bull trend in the near run. Initial minor resistance is 1.3631.
GbpUsd posted a 26-year high on Wednesday at 2.0133. Potentially, the next barrier is 2.0230. There, the rise from 1.9591 would equal the distance made in the 1.9184-1.9823 preceding rise. Initial support cuts in at Monday's 1.9941 high. Only a break of 1.9850 former resistance would put the bull trend on hold in the short term. Initial support is at the 1.9986 yesterday low.
UsdJpy Yen has recovered ahead of the 117.52 (50% retracement of the 115.15 to 119.89 advance), but a recovery beyond 119.04, the high from April 18 is minimally required to offset the immediate bear threat. A return of the bull trend would drive toward 119.88 and the nearby 120 psychological round resistance. Further advance would show 120.54 (76.4% retracement of the 122.20-115.15 decline). Initial minor support is 117.73 before 116.82 strong support. Still away from trend low 115.15 trendline support
UsdChf may break again the 1.2030 mid-March low and would targets 1.1984 trendline support and the nearby early-December low at 1.1881. Initial resistance is at the 1.2068 April 13 low, but minimally, a break of 1.2150, the high from April 17 would be necessary to relieve the heavy tone.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.4848 T ||2.0230 T ||120.00 T ||1.2285 P |
|1.3666 T ||2.0100 T ||119.90 K ||1.2247 S |
|1.3595 M ||2.0085 M ||119.49 S ||1.2150 S |
|1.3625 ||2.0050 ||118.70 ||1.2050 |
|1.3525 M ||2.0000 M ||117.73 M ||1.2030 S |
|1.3482 M ||1.9986 S ||116.82 S ||1.1984 T |
|1.3395 S ||1.9850 P ||115.15 T ||1.1881 P |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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