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Wednesday July 18, 2007 - 07:47:35 GMT
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ACM - www.ac-markets.com
Dollar falls to 26-year low vs Sterling
By Jean-Claude Braha - ACM Advanced Currency Markets, Geneva, Switzerland
News and Events:
The dollar slid to a 26-year low against sterling on Wednesday due to worries about the U.S. sub-prime mortgage sector and after British inflation data boosted expectations for higher interest rates there.
Sterling rose as high as $2.0550 early this morning, getting a boost after data on Tuesday showed that the annual core consumer price index in Britain rose to a decade-high 2.0 percent in June. The data bolstered expectations that interest rates in Britain -- already the highest among Group of Seven industrialized nations at 5.75 percent -- could climb beyond 6 percent by the end of the year. Analysts said "It might be more or less factored in, but it looks like interest rates are headed higher in Europe". By contrast, the dollar seems to be on shaky ground due to lingering concerns that troubles in the U.S. sub-prime mortgage sector might have an adverse impact on the broader economy, traders said.
Such worries came to the fore again after Bear Stearns Cos. Inc. said in a letter to investors on Tuesday that two of its hedge funds that bet heavily on risky sub-prime loans now have "very little value".
GbpUsd stood at $2.0490 +0.62% yesterday, and hit 2.0550 high this morning. Sterling was also on solid footing against the low-yielding Japanese currency and stood at 250.16 yen, hovering near a 16-year high of 250.49 yen hit on Tuesday.
UsdJpy slipped to 121.59 this morning from yesterday 122.10 close. EurUsd inched up to $1.3795, hitting 1.3834 today new record high. Later this session, investors' focus will turn to U.S. Federal Reserve Chairman Ben Bernanke's semi-annual testimony before Congress as well as U.S. Consumer Price Data.
Today's Key Issues (time in GMT):
08.30 GB Bank of England Minutes for 4-5 July meeting
08.30 GB May 3 months Average Earnings 3.6% vs 4%
08.30 GB May ILO Unemployment Rate (3 months) 5.5% vs 5.5%
09.00 EUR May Euro-zone Trade Balance â‚¬2.2B vs â‚¬1.8B
11.00 US July 13th, MBA Mortgage Application previously 1.1%
11.00 CAD June Consumer Price Index 0.1% vs 0.4% (MoM)
11.00 CAD June Consumer Price Index 2.4% vs 2.2% (YoY)
11.00 CAD June CPI BoC core 0.1% vs 0.3% (MoM)
11.00 CAD June CPI BoC core 2.6% vs 2.2% (YoY)
11.00 CAD June Leading Indicators 0.4% vs 0.5% (MoM)
13.30 US June Consumer Price Index 0.1% vs 0.7% (MoM)
13.30 US June Consumer Price Index 2.6% vs 2.7% (YoY)
13.30 US June CPI core 0.2% vs 0.1% (MoM)
13.30 US June CPI core 2.2% vs 2.2% (YoY)
13.30 US June Housing Starts 1450k vs 1474k
13.30 US June Building Permits 1480k vs 1520k
14.00 US Fed's Bernanke testifies before House Panel on Monetary Policy
23.50 JPN May All Industry activity index 0.1% vs 1.2%
The Risk Today:
EurUsd remains strong, in 1.3760 â€“ 1.3834 trading range, after having hit 1.3834 this morning new record high. A return below 1.3750 and 1.3659 former resistances will put the actual positive trend on hold. Initial minor support holds 1.3814 previous high trend.
GbpUsd bullish trend remains intact. Channel top 2.0434 and 2.0500 resistances have been cleared. Cable is trading above the top of a developing ending diagonal triangle and going forward, upside would be 2.0568 (equally 1.9187 to 2.0132 advance) and 2.0706 trend top. Former 2.0500 resistance marks initial support. Market 2.0100 former trend resistance holds strong support. A break there will open the door back down to 2.0000 pivot point.
UsdJpy remains trading in 120.98 â€“ 122.62 trading range. 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 support holds 120.98 level. A break down 120.78 strong support may put 119.55 in sight.
UsdChf remains weak after the sharp drop early last week down to 1.1986 low and hit this morning 1.1962 low. On the recent downtrend, focus shifted on 1.1881 early December low and 1.1739 April 2005 trend supports. Former support 1.2234 marks resistance after initial resistance 1.1986.
Resistance and Support:
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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