Mon, Mar 31 2008, 06:29 GMT
by ActionForex.com Team
Action Insight Daily Report
Markets in Tight Range, Sterling to Resume Fall
Some volatility is seen as the last trading day of the first quarter starts. The Japanese yen is broadly lower on Tokyo Fix but the losses are so far limited. Aussie was dragged down by weakness in Kiwi after report showed business confidence dropped to a 17 year low in Mar. Dollar is basically still staying in very tight range against Euro and Swissy. After all, markets are still staying in tight range and will likely remains cautious with a number of important even risks scheduled ahead in the week. The bigger mover ahead today could indeed be Sterling which edges to new record low against Euro at 0.7932 and dives against dollar into European session.
A number of economic data are released from Japan today. Manufacturing PMI dipped further from 50.8 to 49.5 in Mar, first contraction reading in five months. Industrial production dropped -1.2% mom in Feb but rose 4.2% yoy in Feb. Housing starts dropped -5.0% yoy. Construction orders rose 18.4%. After all, markets paid little attention to the data as focus is undoubtedly on tomorrow's quarterly Tankan Survey.
Looking ahead, Eurozone mar CPI estimate is the main focus in European session today. Inflation is expected to climb further from 3.2% to 3.3% yoy, providing another bullet for ECB to be on hold. Business climate is expected to remain unchanged at 0.72 in Mar while Economic sentiment is expected to drop slightly from 100.1 to 100.0. EUR/USD has been consolidating in tight range since last Wed and will be looking at every opportunity to resume its rally to 1.5902 record high.
Another focus will be Canadian GDP which is expected to rebound from Dec's -0.7% mom contraction to Jan's 0.5% growth. Technically speaking USD/CAD's pull back from 1.0307 could have already completed and weak GDP reading will likely trigger another selloff in the Canadian dollar while pushes USD/CAD through 1.0307 near term resistance.
From US, Chicago PMI is expected to recovery slightly from 44.5 to 46.5 in Mar.
More Technical Analysis Reports Here
GBP/USD Daily Outlook
Daily Pivots: (S1) 1.9853; (P) 1.9971; (R1) 2.0060; More
Cable's recovery was limited at 1.9979 and dives again into European session. At this point, intraday bias remains on the downside as long as 1.9979 minor resistance holds. As discussed before, with 4 hours MACD staying below signal line, further decline is expected to retest 1.9736 support. Break will confirm that fall from 2.0391 has resumed towards 1.9937 low. On the upside, above 1.9979 will turn intraday outlook neutral again. Further break of 2.0193 will suggest that stronger rally should be seen to retest 2.0389 resistance instead. But another fall is still in favor if recovery is limited below 2.0193 resistance.
In the bigger picture, down trend from 2.1161 have made a low at 1.9337. Subsequent corrective rebound from 1.9937 has completed with three waves up to 2.0391. However, the question is on whether such corrective rebound represents the whole correction to fall from 2.1161, or just part of it. In the latter case, choppy sideway trading will extend further in rather unpredictable manner.
Nevertheless, with 61.8% retracement of 2.1161 to 1.9337 at 2.0464 remains intact, the fall from 2.1161 is still expected to extend further. On the downside, firm break of 1.9360 support and 1.9337 low is needed to confirm down trend from 2.1161 has resumed for next target of 1.8565/8619 cluster support (100% projection of 2.1161 to 1.9337 from 2.0391 at 1.8565, 61.8% retracement of 1.7407 to 2.1161 at 1.8619). On the upside, as discussed before, decisive break of 2.0464 fibo resistance will dampen this view and encourage a retest of 2.1161 high.
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