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Friday June 8, 2007 - 10:25:10 GMT
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ACM - www.ac-markets.com
Dollar rose against majors on rising Treasury Yields
By Jean-Claude Braha - ACM Advanced Currency Markets, Geneva, Switzerland
News and Events:
The Dollar rose against the Euro Thursday as a fall in US stocks and a rise in Treasury yields boosted demand for the Dollar, ‚Äúconsidered as a safe haven‚ÄĚ. Currency markets were especially attentive to the higher interest rates in Treasury after the 10-year surpassed a technical level of 5.03%, and at one point reached 5.14%, its highest level in nearly one year. The declines in US equity and bond markets came as investors are no anticipating less possibility of Federal Reserve rate cuts in 2007 amid improved US economic data over the past month. Most analysts now expect the Fed to stay on hold throughout the year.
The Dollar also got some support early Thursday form US jobs data that were in line with expectations and suggested that the labor market remains on solid ground. The number of US workers filing new claims for jobless benefits dropped slightly in the latest week, marking the seventh decline in the past eight weeks.
EurUsd declined to an intraday low 1.3422, its lowest level in the past week, before closing 1.3427 -0.53%. While the Dollar's gains yesterday were modest against the Euro, the GbpUsd dropped significantly 1.9747 intraday low (lowest since May 31st). GbpUsd ended session at 1.9781 -0.73%. UsdJpy decline modestly -0.21% at 120.88 as risk aversion caused carry trade players to reverse some of their bets. Analysts added that the Yen stands to rise further against the Dollar in the coming days amid indications that a fall in Treasury prices has caused some Japanese institutional investors to liquidate their US bond holdings.
The Bank of England left its official interest rate on hold at 5.5% yesterday. While this was mostly expected by the market, some dealers said there was plenty of market chatter about a possible hike, especially because price pressures remain strong in the UK, which could warrant a hike.
Today's Key Issues (time in GMT):
08.30 GB April Industrial Production 0.2% vs 0.3% (MoM)
08.30 GB April Industrial Production 0.6% vs -0.2% (YoY)
10.00 EUR April Euro-zone OECD leading indicators 109.7
11.00 CAD May Net change in Employment 17k vs -5.2k
11.00 CAD May Unemployment rate 6.1% unchanged
12.15 CAD May Housing Starts expects 215k vs 211.9k
12.30 US April Trade Balance $-63.5B vs $-63.9B
12.30 CAD April International Merchandise Trade C$4.9 vs C$4.6
The Risk Today:
EurUsd pullback from Tuesday's 1.3554 high clears support at 1.3455 (61.8% retracement of the 1.3393-1.3554 rise) and clears the way for a run at last week's 1.3393 trend low. A break there would open the door for a run at 1.3370 (38.2% retracement of 1.2865-1.3683). 1.3455 former support marks initial resistance.
GbpUsd pushed through initial support 1.9900 and continues through 1.9823 former support (61.8% retracement of the 1.9733-1.9969 rise) and the breakout high from May 31. This paves the way for a deeper retreat towards 1.9677 trend low. This could resume bear trend towards 1.9659 (50% retracement of the 1.9184 to 2.0134 advance).
UsdJpy is holding onto 120.86 support but stays capped below 121.56 resistance level. A return above this resistance area is required to bring the 122.14 trend high back into focus. Bull trend remains intact with the focus on the January-February 122.10 to 122.22 highs. Not far off is 122.38 (61.8% of 135.18-101.65 big 5 years decline).
UsdChf has held above the 1.2125 May 15 low. The sharp recovery from Wednesday 1.2148 low clears 1.2248 (61.8% retracement of the 1.2311-1.2148 decline). Sustained move above this area would put last week's 1.2311 peak back into focus and test resistance at 1.2356 (61.8% retracement of the 1.2575-1.1994 decline). A break of 1.2200 would open the way toward 1.2125.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3750 T ||2.0133 T ||122.22 T ||1.2573 T |
|1.3554 S ||2.0000 K ||122.14 S ||1.2356 S |
|1.3455 M ||1.9900 M ||121.56 M ||1.2311 M |
|1.3400 ||1.9735 ||121.05 ||1.2275 |
|1.3393 T ||1.9677 T ||120.86 M ||1.2200 M |
|1.3370 S ||1.9659 S ||119.55 T ||1.2125 S |
|1.3290 S ||1.9522 T ||118.90 S ||1.2125 S |
|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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Thu 19 Oct
01:30 AU- Employment
08:30 GB- Retail Sales
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Fri 20 Oct
12:30 CA- Retail Sales & CPI
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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.
- 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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