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ACM - www.ac-markets.com
Euro bounces back on US CPI report; future US rate cut possible
By James Brandt - ACM Advanced Currency Markets, Geneva, Switzerland
News and Events:
US CPI data suggested that inflation is under control and a possible rate cut by the Federal Reserve is not ruled out. Furthermore, investors believe that the European Central Bank is not through with rate hikes as growth and inflation figures support this expectation.
The Euro gained to a record high against the Yen in yesterday's session, topping out at 163.66. In early trading today, the pair broke through to 163.76 and is very well supported as investors continue to pile money into carry-trades. While inflation is in check and global stock markets are on the rise, carry-trades enjoy accelerated growth as investors seek funds from to low-yielding currencies to invest in higher-yielding regions. For now, there is nothing to stop the trend.
Today's most interesting chart is the Cable. Having fallen from its high of 2.0133 on April 18th (from the bull run that began at 1.9183 on March 5th) it has retraced a perfect Fibonacci 38.2% AND hitting the 62-day EMA, triggering stops at and around 1.9768. The pair has since bounced back to 1.9850, and still keeps a bullish bias.
Today's Key Issues (time in GMT):
10.00 EUR Italian Consumer Price Index, NIC including tobacco (MoM) (APR F) 0.2% vs 0.2%
10.00 EUR Italian Consumer Price Index, NIC including tobacco (YoY) (APR F) 1.5% vs 1.5%
10.00 EUR Italian Consumer Price Index, EU Harmonized (MoM) (APR F) 0.5% vs 0.5%
10.00 EUR Italian Consumer Price Index, EU Harmonized (YoY) (APR F) 1.7% vs 1.7%
10.30 GBP Claimant Count Rate (APR) 2.9% vs 2.9%
10.30 GBP Jobless Claims Change (APR) -5.0K vs -9.2K
10.30 GBP ILO Unemployment Rate (3mths) (MAR) 5.5% vs 5.5%
10.30 GBP Average Earnings, including bonus (3M/YoY) (MAR) 4.8% vs 4.6%
10.30 GBP Average Earnings, excluding bonus (3M/YoY) (MAR) 3.6% vs 3.6%
10.30 GBP Manufacturing Unit Wage Cost (3M/YoY) (MAR) -0.4% vs -0.6%
11.00 EUR Euro-Zone Consumer Price Index (MoM) (APR) 0.5% vs 0.7%
11.00 EUR Euro-Zone Consumer Price Index (YoY) (APR) 1.8% vs 1.9%
11.00 EUR May EUR Euro-Zone Consumer Price Index, Core (MoM) (APR)
11.00 EUR Euro-Zone Consumer Price Index, Core (YoY) (APR) 1.9% vs 1.9%
11.30 GBP Bank of England Quarterly Inflation Report
13.00 USD MBA Mortgage Applications (MAY 11)
13.30 CAD International Securities Transactions (MAR) C$3.0B vs C$4.8B
13.30 USD Housing Starts (APR) 1480K vs 1518K
13.30 USD Building Permits (APR) 1526K vs 1564K
13.30 USD Housing Completions (APR) 1.620M vs 1.632M
15.00 USD Fed's Plosser Moderates Atlanta Fed Panel on Derivatives
15.15 USD Industrial Production (APR) 0.3% vs -0.2%
15.15 USD Capacity Utilization (APR) 81.5% vs 81.4%
16.30 USD EIA Crude Oil Stocks (MAY 11)
17.00 USD Fed's Kohn Speaks on Atlanta Fed Panel on Credit Derivatives
19.00 USD Fed's Fisher Speaks in Fort Worth, Texas About Globalization
The Risk Today:
EurUsd has traded back into the previous upwards channel, first breaking through 1.3578 and then closing for the day past the trend line at 1.3592. Strong resistance found at 1.3623 and after a break of that level, look for a target of 1.3683, the all-time tradeable high. On the downside, anything below 1.3542 would be bearish, again.
GbpUsd bouncing off the 38.2% retracement and the 62-day EMA, there is plenty of support to the keep the pair above 1.9800. The trend is still up, but a move to 2.0133 would be the only true confirmation of that. Look for resistance at 1.9999.
UsdJpy has found a lot of congestion in the 120.00 â€“ 120.40 range. Look for a close above 120.59 for a move higher to the 121.81 target. On the downside, a break of 119.95 would open up 119.48 and then 118.90.
UsdChf The pair is trying to keep in the temporarily short term bullish trend and floating above 1.2128. A move below would signal a major drive to 1.2000. On the upside, a daily close above 1.2160 opens a move to 1.2223, the next resistance.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3829 T ||2.0133 S ||122.47 T ||1.2287 S |
|1.3685 S ||1.9999 S ||121.81 K ||1.2223 K |
|1.3623 S ||1.9907 M ||120.40 S ||1.2192 S |
|1.3605 ||1.9867 ||120.35 ||1.2151 |
|1.3542 M ||1.9751 M ||119.91 T ||1.2121 M |
|1.3458 S ||1.9593 S ||118.90 S ||1.2083 S |
|1.3413 T ||1.9403 S ||118.12 S ||1.2005 T |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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