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Thursday May 24, 2007 - 10:16:12 GMT
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ACM - www.ac-markets.com
Interest rates in Europe could rise more than previously thought!
By Jean-Claude Braha - ACM Advanced Currency Markets, Geneva, Switzerland
News and Events:
The Dollar fell on Wednesday after Minutes of Bank of England Policy Meeting and strong data on Euro-zone industrial Orders suggested interest rates in Europe could rise more than previously thought. The GBP surged against the Dollar after the BoE minutes showed that, contrary to expectations, the Central Bank's decision to raise rates this month was unanimous, and some members even had considered a half 0.5% rise. The Euro was initially boosted by data showing a large rise in Euro-zone factory orders in March, but investors positioning before today data on US Durable Goods Orders and New Home Sales eroded those gains in later trading.
The market continues to price in two more 0.25% rate hikes from the European Central Bank this year, to 4.25%, but the chances of further hikes are rising.
EurUsd was trading up 0.04% to 1.3456 after hitting intraday high 1.3502. GbpUsd was up 0.61% to 1.9864, having rallied as high of 1.9895 after the release of the Minutes. UsdCad hit again a 30-year low of 1.0814, extending a rally driven by rising oil prices and a bidding war by foreign suitors for Canadian companies in the natural resources sector. UsdJpy was firmer at 121.57 -0.12%, after hitting 121.88 3 Â½ -months high. Markets expect Japanese interest rages to remain the lowest in the industrialized world for some time, and buoyant equity markets around the world have encouraged investors to sell Yen for higher-yield assets in so-called carry-trades.
Today's Key Issues (time in GMT):
07.15 CHF Non-farm payrolls 3.71M vs 3.70M
08.00 EUR German IFO Business Climate May 108.80 vs 108.6
08.00 EUR German IFO Current Conditions May 113.5 vs 113.20
08.00 EUR German IFO Expectations May 104.5 vs 104.3
09.00 CHF ZEW Survey expectations May, previously -3.5
09.00 GB CBI Industrial Trends Survey â€“ May Orders 3 vs 2
12.30 US April Durable Goods Orders 0.8% to 1% vs 3.7%
12.30 US April Durable Goods ex-transportation 0.6% vs 1.4%
12.30 US April Durable Goods ex-defense 0.8% vs 4.8%
12.30 US May 19th Initial Jobless Claims 300k to 305k vs 293k
14.00 US April New Home Sales 860k vs 858k
23.30 JPN May Tokyo Consumer Price Index 0.2% vs 0.2% (YoY)
23.30 JPN May National CPI 0% vs -0.1% (YoY)
00.00 US Fed's Mishkin speaks on GDP, Dallas
The Risk Today:
EurUsd The recent break of 1.3612 gives the short-term descent from 1.3683 room towards 1.3370 (38.2% retracement of 1.2865-1.3683). Initial resistance is at 1.3502, yesterday's high, but only a move above 1.3545 resistance would halt downward pressures and revive the bull trend with focus on the 1.3623 resistance.
GbpUsd reversed higher from this week's 1.9677 trend low. Sustained gains above last week's 1.9875 high would mark a turn in the short-term bear trend from the mid-April 2.0133 high and may open the way for further gains towards 2.0000 early May high. Renewed losses below 1.9716, yesterday low, would however resume bear trend towards 1.9659 (50% retracement of the 1.9184 to 2.0134 advance).
UsdJpy is again testing the 121.64 resistance from late February high, shifting focus to the January 122.22 top. Yesterday high 121.88 would mark minor resistance with 122.05 (February high). Initial support holds 120.54 level.
UsdChf remains constructive overall following the recent break above the 1.2285 early April 9 high; aiming the broader advance from 1.1996 toward the 1.2355 area. This zone marks the 61.8% retracement of the 1.2573-1.1996 decline. Mild support is at 1.2241, Wednesday's low.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3750 T ||2.0133 T ||122.22 T ||1.2573 T |
|1.3623 S ||2.0000 K ||122.05 M ||1.2356 S |
|1.3545 S ||1.9875 S ||121.64 S ||1.2309 S |
|1.3455 ||1.9860 ||121.45 ||1.2290 |
|1.3458 S ||1.9716 M ||120.54 M ||1.2241 M |
|1.3413 T ||1.9659 S ||119.55 T ||1.2196 M |
|1.3370 S ||1.9522 T ||118.90 S ||1.2002 T |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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Mon 16 Oct /ul>
01:30 CN- CPI
21:45 NZ- CPI
Tue 17 Oct
08:30 GB- CPI
09:00 DE- ZEW Survey
09:00 EZ- Final HICP
Wed 18 Oct
12:30 US- Housing Starts & Permits
14:30 US- EIA Crude
Thu 19 Oct
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08:30 GB- Retail Sales
12:30 US- Weekly Jobless
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John M. Bland, MBA
- 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.
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