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tisdag, 18 mar 2008
US Rate Statement - On Tap
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
| Daglig trend |  | |  | | | |
| Veckotrend | | | | | | |
| Motstånd | 1.5822 | 2.0150 | 98.38 | 0.9964 | 0.9348 | 0.7989 |
| 1.5797 | 2.0120 | 98.00 | 0.9931 | 0.9317 | 0.7942 | |
| 1.5778 | 2.0091 | 97.80 | 0.9898 | 0.9280 | 0.7900 | |
| Stöd | 1.5700 | 2.0000 | 96.50 | 0.9763 | 0.9120 | 0.7815 |
| 1.5674 | 1.9974 | 96.21 | 0.9740 | 0.9100 | 0.7786 | |
| 1.5650 | 1.9954 | 96.00 | 0.9705 | 0.9068 | 0.7753 |
Economic News
USD -
During the initial phase of yesterday's trading session the greenback collapsed to a 12 year low against the JPY and it also reached record lows against the EUR and the CHF. The main reason for the initial dollar slide was the fact that the emergency liquidity-boosting measures by the Federal Reserve over the weekend failed to ease worries about the U.S. financial system. The Fed lowered the discount rate, which is the rate that U.S banks are charged when borrowing directly from the central bank, from 3.50% to 3.25%. Therefore investors sold the dollar in reaction to this move by the Fed which was also accompanied by the news that the U.S investment bank Bear Stearns needed emergency financing. At the beginning of the Asian trading session there were major concerns surrounding the U.S banking system which reignited risk aversion.
Later, during the U.S trading session there was a flow of key U.S data releases. The Empire State Business Conditions, Industrial Production and Capacity Utilization Rate figures all released lower than expected, which did not help the greenback's cause. However the greenback did manage to find some support as the U.S Current Account and the TIC report surprised on the upside releasing at -173B and 62.0B, respectively. The greenback managed to pullback some lost ground as the nervousness in the market is starting to abate and the focus is now turning to today's FOMC meeting and the possibility of a 1.00% rate cut. If the Fed lowers the Federal funds rate by 1.00% then the greenback might depreciate sharply all across the board. In addition the JPY and CHF crosses should tumble on the back of such an aggressive Fed cut as it will fuel risk aversion and result in a sharp carry trade unwind.
Looking ahead, any significant news released from the U.S today will be overshadowed by the Fed Interest Rate Statement. The market is expecting a 0.75% rate cut, from 3.00% to 2.25%. However many analysts predict a 1.00% rate cut as the Fed will give a last ditch attempt to avoid recession and provide relief for the credit crisis. Volatility and liquidity should decrease today leading up to the rate cut as traders will exercise caution. If the rate cut releases inline with expectations then the greenback may consolidate slightly before resuming its bearish movement.
EUR -
The Euro-zone was devoid of any significant data releases and most of the EUR movement was dollar-centric. The EUR opened the week on a sharp rally against the greenback after news of the Bear Stearns collapse and the emergency discount rate cut. However the EUR did lose some of its previously gained ground as market tensions eased. The main reason why the sharp EUR rally was cut short later on yesterday was due to the Market News International (MNI) report. It claimed that the ECB will increase verbal intervention in the near term as they are increasingly worried by a free-fall in the dollar. Also according to the MNI report there is increasing pressure within the ECB to get the US to act on the weak dollar. Nevertheless, it is important to note that there is a split opinion within the ECB Council regarding intervening against the strong EUR.
Looking ahead to today, the only news expected from the European economy will be the Italian Trade Balance. This figure is considered insignficant and should not have any impact on the EUR. All eyes today will shift towards the FOMC meeting later on today and any EUR sharp movement will once again be dollar centric.
JPY -
The JPY rallied against the greenback to its highest level since September 1995 on the back of the unexpected discount rate cut and the Bear Stearns turmoil. The credit crisis has hit the U.S financial markets hard and it has been accompanied by high currency volatility and monetary expansion. As a result risk aversion has a strangle hold over investor sentiment and therefore carry trades should continue to unwind. The only concern for the JPY rally is intervention by the BoJ, which has expressed concerns regarding the recent sharp currency movements. However analysts believe that the BoJ is highly unlikely to intervene before the JPY breaches the 95.00 level against the greenback. Therefore the near term outlook for the JPY is still very much bullish and it should be able to further extend its gains today ahead of the FOMC meeting which will cause some market jitters and result in more suffering for carry trades.
-
Technical News
EUR/USD
After a very sharp bullish trend, the pair appears to be consolidating around 1.5750. The daily chart is showing two consecutive bearish bars and the slow stochastic is showing a bearish cross. It appears that there might be a local corrective move before the bullish trend continues.
GBP/USD
The cable is floating at a key Fibonacci of 2.0050 without a significant bearish breach. The 4 hour chart is showing a bullish cross on the slow stochastic and the RSI is floating at the 50 level. It appears that the momentum is bullish, and a valid target price might be 2.0110.
USD/JPY
The pair is showing local bullish momentum on the hourly level after a very violent drop to the 96.00 level. The daily chart is still bearish which means that it might be preferable to sell on highs today when the moderate corrective move ends.
USD/CHF
After bottoming at 0.9650 the pair has been showing steady appreciation and is now traded around 0.9850. The hourlies are showing fresh bullish momentum, and the daily chart supports the bullish notion. The slow stochastic of the daily chart is showing a bullish cross which means that the corrective move might continue to the 0.9960 by tomorrow. Going long with tight stops might be a good choice today.
The Wild Card
Crude Oil
The 4 hour chart is showing a very clear bullish channel for the past 3 weeks. A very sharp bearish breach occurred and crude oil is now floating around 106.00. This breach has created fresh bearish momentum which has the potential to take oil back to the 100.00 levels quite imminently. This could be a great opportunity for forex traders to swing into a very sharp corrective move.
| Datum | Tid | $€£¥ | Händelse | Per. | Föreg. | Prog. | Fakt. | Pri. |
|---|---|---|---|---|---|---|---|---|
| 09/07 | 23:00 | AUD |  RBA Governor Stevens Speaks | * | * | * |  | |
| 23:50 | JPY | M2+CD Money Supply | y/y | 2.1% | 2.1% | - |  | |
| 09/08 | ALL | OPEC Meeting | * | * | * | | ||
| 05:00 | JPY | Economy Watchers Current Index | 29.3 | - | - | | ||
| 05:45 | CHF | Unemployment Rate | 2.5% | - | - | | ||
| 08:30 | EUR | Sentix Investor Confidence | -15.3 | - | - | | ||
| 08:30 | GBP | PPI Input | m/m | -0.6% | - | - |  | |
| 08:30 | GBP | PPI Output | m/m | 0.4% | - | - | | |
| 12:30 | CAD | Building Permits | m/m | -5.3% | - | - | | |
| 17:30 | USD | FOMC Member Fisher Speaks | * | * | * |  | ||
| 19:00 | USD | Consumer Credit | m/m | 14.3B | - | - | |
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