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Tuesday July 10, 2007 - 08:50:28 GMT
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ACM - www.ac-markets.com
Dollar mixed ahead of Bernanke speech and BoC rate Decision
By Jean-Claude Braha - ACM Advanced Currency Markets, Geneva, Switzerland
News and Events:
The Dollar was mostly flat on Monday in a quiet session but expectations that the Federal Reserve will keep interest rates unchanged this year while other Central Banks tighten monetary policy kept sentiment negative. Analysts said Friday's surprisingly robust US jobs report was not enough to reverse the recent trend of a narrowing of the interest rate advantage for the Dollar over major European currencies, which has eroded demand for the greenback.
High oil prices and steady economic growth are expected to keep European Central Bank on a tightening path, although the Bank of Japan will likely lag all other Group of Seven central banks bar the Fed, even if it does hike rates from 0.5% some time this year. Analysts said ‚Äúthe Dollar remains biased to the downside as a result of the outlook that US interest rates will remain steady for the remainder of this year, which contrasts with rate hike expectations in Canada, the Euro-zone, UK and Japan‚ÄĚ.
EurUsd was flat at 1.3623 yesterday, within striking distance of its record peak 1.3681 from April. GbpUsd rose 0.24% to 2.0156 still consolidating above 2.0100.The US Dollar's sluggishness on Monday was most apparent against the Canadian Dollar, which hit a 30-year peak around 1.0445 on widespread expectations the Bank of Canada will raise rates by 0.25% to 4.5% today. The US Dollar fought back to 1.0498, roughly unchanged on the day. Because there is hardly any US economic data this week, the Bank of Canada decision and statement could have more impact for currency markets than it otherwise might. UsdJpy was flat at 123.33 while the EurJpy rose to a record peak at 168.51, before trading back down to 167.99. Investors' appetite for carry trades is likely to prevent a strong rebound in the Yen.
Today's Key Issues (time in GMT):
08.30 UK May Trade Balance ¬£-6.6B vs ¬£-6.32B
08.30 UK May Trade Balance Non-EU ¬£-4B vs ¬£-3.9B
12.15 CAD June House starts annualized 216.5k vs 229.7k
13.00 CAD Bank of Canada Rate decision 4.5% vs 4.25%
14.00 US May Wholesale inventories 0.4% vs 0.3%
14.00 US May Wholesale Sales previously 1.3%
17.00 US Federal Reserve Chairman Ben Bernanke speaks on Inflations
21.00 US ABC Consumer Confidence previously -7
The Risk Today:
EurUsd is consolidating within 1.3594 ‚Äď 1.3659 trading range after having hit 1.3659 high last week. 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 1.3569 Friday low. Market focus may return quickly on 1.3681 high from April 27th and 1.3750 trend high.
GbpUsd hit 2.0207 high last week. A clear and strong consolidation above 2.0100 former resistance will help to recover toward 2.0200 resistance and put the 2.0305 Trend in sight. A break down of 2.0100 support will open the door down to 2.0000 pivot point and renew focus on 1.9823 for further downside 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 went up to 123.67 high yesterday but ended on a negative tone at 123.22. Market may turn down searching for 122.24 former Trendline and 122.10 strong support from last week. Renewed strength will focus on 124.15 late June high. A break toward 124.15 will reopen the way to 125.57 December 2002 high. Initial resistance holds 123.67.
UsdChf is stabilizing over 1.2190 low hit early July after the 2 weeks downtrend started 1.2472 resistance. Actual trading range 1.2092- 1.2233 need to be broken to show new trend. The 3-months high 1.2472 marks the strong resistance. On the recent downtrend, focus shifted on 1.1996 trend low support. Former support 1.2234 marks the initial resistance.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3750 T ||2.0305 T ||125.57 T ||1.2472 S |
|1.3681 S ||2.0201 M ||124.15 M ||1.2325 S |
|1.3650 M ||2.0173 T ||123.67 M ||1.2234 M |
|1.3610 ||2.0140 ||123.40 ||1.2180 |
|1.3569 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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