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Friday April 27, 2007 - 12:40:17 GMT
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ACM - www.ac-markets.com
Dollar sentiment remains negative ahead of US economic data
By Jean-Claude Braha - ACM Advanced Currency Markets, Geneva, Switzerland
News and Events:
The Dollar rose broadly on Thursday after testing near-record low against the Euro for two consecutive sessions, but sentiment remained negative ahead of US economic growth data due on Friday. Soft US economic data this week, particularly on the housing front, has contrasted with signs of robust growth in the Euro-zone. In addition, many European policy-makers have said European businesses are managing to deal with the strong Euro. If the pace of US GDP expansion in the 1Q meets the consensus forecast of 1.8% rise, it will be the fourth consecutive quarter of below-trend economic growth. But even a number slightly above forecast may not be enough to set the ailing Dollar on a path to recovery. Still, investors are expecting the Federal Reserve will cut interest rates at least once this year, compared with forecast for higher rates in the Euro-zone and United-Kingdom, among others.
This morning, the market showed little reaction to a steeper-than-expected 0.3% drop in Japanese Core Consumer Prices in March, which reinforced expectations that the Bank of Japan will take its time to raise interest rates further. The Yen fell against major currencies on Thursday, weakening to its lowest level against the Euro since the single currency was launched in 1999. The BoJ left the overnight call rate unchanged at 0.5% at a policy meeting this morning, as widely expected. The Decision was reached unanimously by the BoJ's policy board.
UsdJpy was up 0.76% to 119.67 and EurJpy climbed 0.41% to 162.52, after hitting a record high of 162.79. EurUsd was down 0.34% at 1.3594 after rising as high as 1.3666 on Wednesday. GbpUsd dropped -0.55% at 1.9907 correcting from mid-April high 2.0133. The biggest movers of the day was the New Zealand Dollar, which fell sharply after the Reserve Bank of New Zealand raised interest rates by 0.25% to 7.75% on Thursday but warned that the currency was â€śunjustifiedâ€ť at exceptionally high levels. NzdUsd was down -0.69% to 0.7391, correcting from 18th April high 0.7494.
Today's Key Issues (time in GMT):
09.30 CHF KOF Swiss Leading Indicator (APR) 2.0 vs 1.9
12.30 CAD Business Conditions Orders (APR) previously 2
12.30 USD Gross Domestic Product Annualized (YoY) (1Q A) 1.8% vs 2.5%
12.30 USD Gross Domestic Product Price Index (YoY) (1Q A) 3.1% vs 1.7%
12.30 USD PCE Price Index (YoY) (1Q A) 3.3% vs -1%
12.30 USD Employment Cost Index (QoQ) (1Q) 0.9% vs 0.8%
12.30 USD Employment Cost Index (YoY) (1Q) 3.5% vs 3.3%
14.00 USD University of Michigan Confidence (APR F) 85.2 vs 85.3
The Risk Today:
EurUsd ascended from Monday's 1.3540 low this week and tested 1.3666 Wednesday high, near high 1.3670 from December 30, 2004. Thursday's setback is most likely corrective maintenance of the bull trend, and only a break of 1.3540 would suggest otherwise. Until then, focus will remain on the upside with little resistance above 1.3670 till 1.3750, where the rise from the January 1.2865 low would equal the distance from October to December (1.2483-1.3368) rise.
GbpUsd dips at this stage are most likely corrective with support at 1.9886, the April 17 low. Only a move below this support would damage the underlying short-term bull and only a break of 1.9850 former resistance would put the bull trend on hold. The focus is on the 2.0064 to 2.0071--congestion area and then the 2.0133 trend high. 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.
UsdJpy has moved above resistance from Monday's 119.04 high, exposing 119.90 key level and the nearby 120 psychological round resistance. A break there would pave the way for a climb towards 120.54 (76.4% retracement of the decline from 122.20 to 115.15). Solid support is at Monday's 118.23 low.
UsdChf pulled to within ten pips of mild support at 1.1984, a small reaction low from December 12. The subsequent recovery from 1.1994 has its eyes on Monday's 1.2128 high, but only a move above there would put the underlying bear trend on hold. Until then, focus remains on the prominent low from December 5 at 1.1881 and pivot level.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3750 T ||2.0133 T ||120.00 T ||1.2285 P |
|1.3666 K ||2.0071 M ||119.90 K ||1.2150 S |
|1.3619 M ||2.0000 K ||119.50 S ||1.2128 M |
|1.3610 ||1.9935 ||119.35 ||1.2065 |
|1.3540 S ||1.9886 S ||119.04 M ||1.2031 S |
|1.3482 M ||1.9850 P ||118.23 S ||1.1984 T |
|1.3395 S ||1.9615 S ||115.15 T ||1.1881 P |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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Wed 18 Oct /ul>
12:30 US- Housing Starts & Permits
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- 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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