Thu, Mar 27 2008, 09:34 GMT
by Peter Rosentreich
ACM - Advanced Currency Markets
News and Events:
The Dollar fell for a second straight session on Wednesday, weighed down by surprisingly weak US durable goods orders and remarks by ECB chief Jean-Claude Trichet that Euro-zone rates were at the right level. Analysts said Trichet’s comments, with news that German and French business confidence unexpectedly improved in March, dampened expectation of a soon ECB interest rate cut. That left investors focusing on the widening interest rate differential between the US and the Euro zone. It drove the Euro to a session high of 1.5859, close to all-time peak of 1.5905 touched last week.
The Federal Reserve has slashed its benchmark overnight lending rate by 3% to 2.25% since mid-September, while the ECB has kept its rate at 4%. Lower interest rates make Dollar-denominated assets less attractive.
Yesterday, EurUsd was up 1.35% at 1.5821. UsdJpy dropped to a session low of 98.77 before rebounding to 99.16, down 0.92%. UsdChf dropped 1.68% to 0.9918. The Dollar losses against the Yen and the Swiss franc were attributed to declining US stocks.
Interest rate futures are pricing in a roughly 46% chance of a 50bp cut in the Fed funds rate target next month, to 1.75% Data on Wednesday showed new orders for long-lasting US goods declined 1.7% last month and a key measure of companies’ appetite for investment also contracted. Pace of New Home Sales fell to an annual rate of 590k from a upwardly revised 601k in January. Poll of economists were expecting sales to fall to 580k.
Today's Key Issues (time in GMT):
08:30 DKK March Consumer Confidence -3.5 vs -2.5
08:30 SEK February Trade Balance previous 9.6B
11:00 GBP March CBI distributive trades -5 vs -3
12:30 USD 4Q Core PCE prices 2.7% vs 2.7%
12:30 USD 4Q PCE prices 4.1% vs 4.1%
12:30 USD 4Q Corporate Profits -0.1% vs 0.0%
12:30 USD 4Q GDP deflator 2.7% vs 2.7%
12:30 USD 4Q GDP Final 0.6% vs 0.6%
12:30 USD 4Q GDP Sales 2.1% vs 2.1%
12:30 USD Initial Claims 365k vs 378k
14:00 USD February Help Wanted 20 vs 21
21:45 NZD 4Q GDP 3.4% vs 3.3%
23:30 JPY February All households spending 2.4% vs 3.6%
23:30 JPY February CPI Core Nationwide 0.9% vs 0.8%
23:30 JPY February CPI Core Tokyo 0.5% vs 0.4%
The Risk Today:
EurUsd Euro posted a new all-time high 1.5904 last week, confirming medium term trading range 1.5400 – 1.6000. Initial support hold 1.5528 (23.6% retracement of 1.4311-1.5904 advance). Psychological 1.5000 level marks strong key support before 1.4500 pivot point. Initial resistance hold 1.6000 key level.
GbpUsd Cable advanced as high as 2.0398 two weeks ago, 2 ½ month high. It reversed last week below 2.0000 further to profit taking. Actual trading range is 1.9700 – 2.0400. Psychological 2.0100 and 2.0000 supports have been broke last week. Renewed pressure may open the way down to 1.9337 January low and 1.9105 (50% retracement of 1.7049 – 2.1162 advance). Current consolidation over 2.0000 may open the way up 2.0200.
UsdJpy It rebounded from 95.74 last week low. Last week marks the end of a 4-week downtrend. 100 Pivot marks resistance. Bottom support holds 95. On the Upside, only a confirmation over 100 may open the way up to 110.10 strong (Trendline) resistance and mid January double top ahead of 111.92 early January high. Strong support holds 95.74 last week low.
UsdChf Market remains weak below 1.0200, having traded below 1.0000 psychological level last week. Strong support holds 0.9639 last Monday low. Uptrend would only return over 1.0200 resistances. Early January double top 1.1191 marks strong resistance.
Resistance and Support:
| EURUSD | GBPUSD | USDJPY | USDCHF |
| 1.6000 K | 2.0577 T | 110.10 T | 1.1191 S |
| 1.5904 S | 2.0447 S | 105.00 S | 1.0500 S |
| 1.5832 M | 2.0100 P | 100.00 P | 1.0200 S |
| 1.5745 | 2.0120 K | 99.55 | 0.997 |
| 1.5528 S | 1.9736 M | 99.63 M | 1.0000 P |
| 1.5000 K | 1.9337 S | 95.74 S | 0.9639 K |
| 1.4500 P | 1.9105 K | 95.00 T | 0.9500 T |
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