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Friday July 6, 2007 - 09:54:34 GMT
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ACM - www.ac-markets.com
Dollar rose after ISM survey beats forecasts
By Jean-Claude Braha - ACM Advanced Currency Markets, Geneva, Switzerland
News and Events:
The Dollar rose against the Yen and Euro on Thursday as an unexpected gain in US services sector activity eased concerns the Central Bank may have to cut interest rates later this year. Dollar erased early losses against the Euro after the Institute for Supply Management's non-manufacturing index rose in June to its highest in a year. Beating forecasts of a modest decline.
The ISM Services index rose to 60.7 in June, beating forecasts for a modest decline from the previous month to 58 and easing concerns about a slowing economy. Another report, the ADP Employer Services, forecast a higher than expected gain in private sector jobs, boosting expectations the Labor Department's monthly payrolls data on Friday will beat expectations as well. Analysts said â€śAfter the strong reading on ISM and a strong ADP jobs report, the market is optimistic about today's jobs data, which is all very supportive to the dollarâ€ť.
The European Central Bank kept rates on hold at 4% but suggested it would raise borrowing costs again in coming months to fight inflation. ECB President Jean-Claude Trichet said that he did not intend to sway the market's expectations about the future path of monetary tightening in the Euro-zone. Analysts took this to mean that futures prices indicating a two-in-three chance of an ECB rate hike by September, and a dead certainty of a rise by October, were on the mark. Yesterday afternoon, the Dollar has been losing its allure to yield-hungry investors as rates rise in Europe. The Dollar fell against Sterling after the Bank of England raised interest rates to 5.75%, as expected, and said inflation risks remained to the upside. The US currency hit a 26-year low versus the Sterling on Wednesday. Many traders remain bearish on the Dollar, but with Sterling already at 26-year highs and the Euro also just short of record peaks against the Dollar, some were locking in short-term gains. With the Bank of England and ECB rates announcement out of the way, people are taking profits. In contrast, the Federal Reserve is expected to keep interest rates on hold until the end of the year, with futures pricing in a one-in-ten chance of a rate cut.
Today's Key Issues (time in GMT):
08.00 EUR ECB's Ordonez, EU Almunia speak in Santander
08.30 UK May Industrial Production 0.3% vs 0.3% (MoM)
08.30 UK May Industrial Production 0.3% vs 0.4% (YoY)
08.30 UK May Manufacturing Production 0.3% vs 0.3% (MoM)
08.30 UK May Manufacturing Production 0.9% vs 1.3% (YoY)
10.00 EUR Euro-zone OECD Leading Indicator previously 110
11.00 CAD June Unemployment Rate 6.1% vs 6.1%
12.30 US June Non-Farm Payrolls 120k vs 157k
12.30 US June Unemployment Rate 4.5% vs 4.5%
The Risk Today:
EurUsd reversed down -0.18% to 1.3594 after hitting 1.3660 high. A return below 1.3554 and 1.3522 former resistances will put the recent positive trend on hold. Any further set back lower than 1.3373 could open the way toward 1.3277 key support (50% retracement from 1.2872 to 1.3681 advance). Initial support holds 1.3546 last Friday high. Market focus turns away from 1.3681 high from April 27th and 1.3750 trend high.
GbpUsd hit 2.0201 high yesterday, not far from previous day 3-week 2.0207 high. A break of 2.0100 former resistance will open the way toward 2.0000 pivot point. With further down side, a return under 1.9900 could deep toward 1.9700 and 1.9659 (50% retracement of the 1.9184 to 2.0134 advance) next support. Initial resistances are 2.0201 and 2.0207.
UsdJpy found strong support on 122.10 support and 122.24 former Trendline. This double bottom line will renew strength for further focus on 124.15 late June high. A break toward 124.15 will reopen the way to 125.57 December 2002 high.
UsdChf reversed from mid-June 1.2472 high and hit Monday 1.2092 two-month low. Range 1.2092-1.2099 marks strong short term support. The 3-months high 1.2472 marks the strong resistance. On the recent downtrend, focus shifted on 1.1996 trend low support. Former support 1.2178 marks the initial resistance before 1.2234.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3750 T ||2.0305 T ||125.57 T ||1.2573 T |
|1.3681 S ||2.0201 M ||124.15 M ||1.2472 S |
|1.3650 M ||2.0173 T ||123.67 M ||1.2325 S |
|1.3590 ||2.0109 ||123.25 ||1.2195 |
|1.3546 M ||2.0100 S ||122.22 S ||1.2092 M |
|1.3373 S ||2.0000 P ||120.78 S ||1.2083 M |
|1.3277 K ||1.9823 S ||119.55 T ||1.1996 T |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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Amazing Trader EVENT RISK Calendar:
Wed 18 Oct /ul>
12:30 US- Housing Starts & Permits
14:30 US- EIA Crude
Thu 19 Oct
01:30 AU- Employment
08:30 GB- Retail Sales
12:30 US- Weekly Jobless
Fri 20 Oct
12:30 CA- Retail Sales & CPI
14:00 US- Existing Homes Sales
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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