Forex Investment

LONDON (Thomson Financial) - The euro remained near its new all-time high against the yen and close to its record against the dollar despite the US currency’s rally today.

The European single currency recorded its new yen high of 162.53 yen on expectations strong growth would lead to further interest rate rises for the 13-nation single currency euro zone.

Carry trades, where money is borrowed in countries with low interest rates like Japan to be invested in higher-yielding economies, have grown increasingly popular as the BoJ has taken a cautious approach in raising interest rates.

The euro has also been firm against the dollar and is not far off another attempt at the 1.3666 usd high achieved in December 2004 despite today’s dollar recovery.

Currency players have driven the euro higher in recent months on growing expectations of further interest rate rises by the European Central Bank, with most economists forecasting a quarter point hike to 4.00 pct in June. Meanwhile, the US Federal Reserve is widely expected to start cutting its key Fed funds rate from the current 5.25 pct some time this year because of soft economic data.

The narrowing of this yield differential makes the euro more attractive.

“The European market focus remains focused on the relative outlook for growth, inflation and interest rates in the US and Europe, as the key to unlocking the door between comparative performance between US and European bonds, and the euro and the dollar,” said Steve Barrow, currency strategist at Bear Stearns.

“Right now the market perception of growth is looking less clear-cut in the US, while the European outlook goes from strength to strength,” he added.

Elsewhere, the dollar’s recovery pushed the pound way below 2 usd despite rumours the UK’s biggest bank HSBC is having to buy up to 5 bln stg in dollars in order to meet its dividend commitments and another firm housing market survey from the Nationwide, the UK’s largest building society.

The market is now fully pricing in another interest rate hike from the Bank of England next month to 5.50 pct after CPI inflation jumped to a 15-year high of 3.1 pct in March and the UK economy continues to grow above its long-run average.

Steve Pearson, currency strategist at HBOS, noted that since 1982, the pound has spent little time trading at a rate higher than 2 usd. In fact, he said these previous episodes show the pound at or above 2 usd for only 10 days.

London 1620 GMT London 1139 GMT

US dollar

yen 119.48 up from 119.30

sfr 1.2083 up from 1.2080

Euro

usd 1.3593 down from 1.3598

yen 162.47 up from 162.45

sfr 1.6428 down from 1.6432

stg 0.6830 up from 0.6822

Sterling

usd 1.9902 down from 1.9931

yen 237.85 down from 237.91

sfr 2.4051 down from 2.4077

Australian dollar

usd 0.8256 down from 0.8296

stg 0.4148 down from 0.4161

yen 98.69 down from 99.03

pan.pylas@thomson.com

pp/slm

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Action Insight | Written by ActionForex.com | Apr 10 07 13:35 GMT |
Forex Mid-Day Technical Report Dollar and Japanese Yen Remain Pressured, Aussie Strong

Dollar and yen remains pressured today with yen falling to record low against euro and new 10 year low against aussie. Aussie also ride on M&A and carry trade flows and surged to new 17 year high against dollar. Meanwhile dollar gave back the post NFP gains against European majors. A couple of dollar negative developments happened in the last 24 hours including concern of escalation in tension in trade relations between US and China. Also, there are renewed concerns on spill over of the sub-prime mortgage problem after American Home Mortgage announced earnings warnings. Also, there are news that Tehran announced its capability of producing nuclear fuel on industrial scale.

More dollar weakness could be seen in short term but both EUR/USD and GBP/USD upside momentum is not convincing. it seems like the commodity currencies including Aussie and Kiwi, and probably the Canadian too, will be the main beneficiary of the current weakness in dollar. No important economic data is scheduled to release in the US session today and the greenback will probably remains pressured till tomorrow’s FOMC minutes. EUR/USD

Daily Pivots: (S1) 1.3334; (P) 1.3357; (R1) 1.3375; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

EUR/USD remains firm today and continues to press 1.3440 high. However, as discussed before, with bearish divergence conditions remaining in 4 hours MACD and RSI, price actions from 1.3253 could be developing into a diagonal triangle which could end the whole rally from 1.2865. Upside of the current rally could be limited and hence short term outlook remains neutral.

On the upside, sustained trading above 1.3440 high is needed to confirm short term strength and indicate rally from 1.2865 is still in progress for 1.2865 high. Otherwise, risk of a short term reversal remains significant. On the downside, break of 1.3336 support will indicate that the whole rise from 1.2865 has possibly made a top at 1.3440 already and encourage further decline towards 1.3253 cluster support (50% retracement of 1.3070 to 1.3440 at 1.3255). Touching of 1.3253 cluster support, with short term rising channel (now at 1.3308) taken out too, will confirm this case. Further correction should be then seen towards 55 days EMA (now at 1.3216) before completion.

In the bigger picture, outlook remains unchanged as long as 1.3086 cluster support (61.8% retracement of 1.2865 to 1.3440 at 1.3085) remains intact. EUR/USD is still trading comfortably within medium term rising channel (1.1639, 1.2483, 1.2978) and medium term up trend from 1.1639 is still in progress. Such up trend is interpreted as having first move completed with three waves up to 1.2978, subsequent sideway consolidation completed at 1.2483. Rise from 1.2483 has made a top at 1.3364 but subsequent correction has completed with three waves down to 1.2865 already. The current rise from 1.2865 should represent resumption of this whole up trend and further rise is still in favor to retest 1.3668 (04 high).

However, sustained break of 1.3086 cluster support will indicate that the rally from 1.2865 has possibly completed and should turn focus back to the medium term rising channel (now at 1.2909). Sustained break of this channel will indicate that the whole medium term up trend from 1.1639 has completed and medium term outlook will then be turned bearish for 1.2483 support first.

GBP/USD

Daily Pivots: (S1) 1.9590; (P) 1.9623; (R1) 1.9657; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

Cable’s rebound from 1.9591 continues today and break of 1.9724 resistance indicates that the correction from 1.9824 has likely completed and further rise should be seen to retest 1.9824 high. However, since a short term top is in place at 1.9824 with bearish divergence in 4 hours MACD and RSI as well as breaking of the rising channel, firm break of this 1.9824 resistance is needed to confirm recent rally has resumed for 1.9913 high. Otherwise, short term outlook remains consolidative and another fall would still be seen before finishing the consolidation. On the downside, below 1.9591 again will indicate correction from 1.9824 has resumed for 1.9545 support. But downside of the correction should be contained by 1.9434 cluster support (1.9183 to 1.9824 at 1.9428) and bring another rally.

In the bigger picture, rise from 1.8090 is still in progress after corrective fall from 1.9913, which should have completed with three waves down to 1.9183, was supported by 1.9215/17 cluster support (50% retracement of 1.8517 to 1.9913 at 1.9215, 38.2% retracement of 1.8090 to 1.9913 at 1.9217). The rise from there should represent resumption the whole rally from 1.8090 and hence further upside is expected. However, with bearish divergence conditions being displayed in weekly RSI and daily MACD a medium term top could be around the corner. The up trend from 1.7047 could make a top after reaching 2.0046/0106 cluster resistance zone (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067, 61.8% projection of 1.8517 to 1.9913 from 1.9183 at 2.0046. And hence, focus will be on reversal signal as cable approaches these levels.

On the downside, below 1.9434 cluster support will dampen the above view and argue that the whole rise from 1.9183 has completed. Focus will then be turned back to 1.9215/17 cluster support and sustained break will indicate that the whole up trend from 1.7047 might have completed earlier then we thought and should the bring deeper correction to 1.8517 support first.

USD/CHF

Daily Pivots: (S1) 1.2228; (P) 1.2255; (R1) 1.2293; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

USD/CHF’s fall continues today, reaching as low as 1.2157 so far. With 4 hours MACD dragged to below signal line, intraday bias remains on the downside and further fall should be seen to retest 1.2082 support. Above 1.2212 minor resistance will turn intraday outlook consolidative first. However, note that consolidation from 1.2029 could still be in progress as long as USD/CHF stays above 1.2082 support. Another rise towards next cluster resistance at 1.2354 (61.8% retracement of 1.2550 to 1.2029 at 1.2351) cannot be ruled out. On the downside, below 1.2082 is needed to indicate that consolidation from 1.2029 has completed and bring retest of this cluster support (78.6% retracement of 1..1878 to 1.2571 at 1.2026).

In the bigger picture, medium term outlook remains bearish with USD/CHF staying below both 55 days EMA and 55 weeks EMA. Daily and weekly MACD is still staying negative, supporting this view too. The preferred interpretation at this point is that the whole down trend from 1.3283 is still in progress with the first move from 1.3283 finished with three waves down to 1.1919. Subsequent rebound to 1.2768 was the interim correction and price actions from there represent resumption of such down trend. Further decline should be seen to 1.1878 low and sustained break will add more credence to this view and bring further medium term weakness towards 100% projection of 1.3283 to 1.1919 from 1.2768 at 1.1404.

However, note that USD/CHF is still bounded in wide range of 1.1878 to 1.2768. A rebound to above 1.2354 resistance will dampen this view and indicate that the fall from 1.2571 has completed after meeting 1.2027 fibo support. Another rise could then be seen to retest this high and then the upper end of the range at 1.2768.

USD/JPY

Daily Pivots: (S1) 119.19; (P) 119.29; (R1) 119.39; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

USD/JPY continues to trade sideway after rise from 116.38 was limited 119.38, below mentioned 119.48 fibo resistance (61.8% retracement of 122.17 to 115.13). As discussed before, break of inner rising trend line with bearish divergence condition in 4 hours MACD suggests that a short term top is formed at 119.38. Short term outlook is turned neutral at this point. On the downside, break of 118.46 will add more credence to the case that a top is formed and, more importantly, the corrective rise from 115.13 could have completed and should then bring further decline towards 117.20 support and then 116.38. However, Sustained break of 119.48 fibo resistance will indicate that stronger rebound is still underway, probably with a retest of 122.17 high.

In the bigger picture, our view remains unchanged. Previous break of medium term rising channel support (108.99, 114.41, 117.87) indicates the whole up trend from 108.99 has completed at 122.17. Weekly MACD’s stay below signal line is still supporting this. The corrective nature of the rise from 108.99 swings favors back to the case that such medium term rally is merely part of a large scale consolidation that started at 121.38, with first leg completed at 108.99 and second leg completed at 122.17. The fall from 121.17 should then the third leg of such consolidation and deeper decline should at least be seen to below 114.02/41 support zone (61.8% retracement of 108.99 to 122.17 at 114.02) first with much possibility of further fall to retest 108.99 low.

However, decisive break of 119.48 fibo resistance (61.8% retracement of 122.17 to 115.13) will argue that the price actions from 122.17 is developing into large range consolidation instead of correction to rise from 108.99. A retest of 122.17 high could be seen in such case. But still, firm break above this resistance is needed to confirm medium term rally from 108.99 has resumed. Otherwise, medium term outlook will be neutral at best.

EUR/JPY

Daily Pivots: (S1) 159.18; (P) 159.39; (R1) 159.54; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

EUR/JPY’s rally extends further to 160.09 today. At this point, intraday bias remains on the upside and further rally is still expected to follow towards cluster projection target of 100% projection of 150.75 to 155.72 from 152.64 at 160.68 and 100% projection of 152.64 to 158.801 from 155.34 at 160.71. However, below 159.01 minor support will suggest that the rise from 155.34 has possibly completed. More important, this will be the first warning that whole rally from 150.75 has ended after meeting 159.63 resistance. Focus, will then turn to short term rising channel (now at 157.89).

In the bigger picture, we’re treating the whole year long rise from 130.60 as resumption of the long term up trend with first wave ended at 143.60, subsequent correction ended at 137.167. The third wave up could have ended at 159.63 with a diagonal triangle already. Fall from 159.63 should represent the fourth wave correction and has already met it’s target of 38.2% retracement of 137.16 to 159.63 at 151.05) and lower channel line (143.60 to 159.63, 137.16). The current rise from 150.75 should represent the final rally in the whole move targeting upper boundary of the medium term channel (now at 161.51). Attention will be paid to reversal signal as EUR/JPY approaches this resistance.

On the downside, break of the short term rising channel will open up two short term bearish scenarios where the medium term top could be formed already or correction from 159.63 is not finished and is developing in to wide range consolidation instead. In either case, a retest of 150.75 low would likely be seen.

Forex News Digest

http://c.moreover.com/click/here.pl?r880490520
Tue, 10 Apr 2007 10:00:00 GMT from Bloomberg

http://c.moreover.com/click/here.pl?r880490247
Tue, 10 Apr 2007 09:59:00 GMT from Bloomberg

http://c.moreover.com/click/here.pl?r880477301
Tue, 10 Apr 2007 09:42:00 GMT from The Australian

http://c.moreover.com/click/here.pl?r880470979
Tue, 10 Apr 2007 09:34:00 GMT from Bloomberg

http://c.moreover.com/click/here.pl?r880456389
Tue, 10 Apr 2007 09:19:00 GMT from Reuters

http://c.moreover.com/click/here.pl?r880437471
Tue, 10 Apr 2007 08:56:00 GMT from Reuters

http://c.moreover.com/click/here.pl?r880386272
Tue, 10 Apr 2007 08:02:00 GMT from AP via MSN Money

http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
JPY BOJ Rate Decision 0.50% 0.50% 0.50%
05:45 CHF Swiss Unemployment rate Mar 3.00% 3.10% 3.20%
06:00 JPY Japan Machine Tool Orders Mar Y/Y 9.50% N/A 16.50%
06:00 EUR Germany Trade balance (euro) Feb 14.2B 15.0B 16.2B
06:00 EUR Germany Current accout (euro) Feb 8.4B 10.6B 11.0 B 11.2B
06:00 EUR Germany Exports Feb 1.90% 1.10% 0.00% 0%
06:00 EUR Germany Imports Feb 5.60% 1.00% -1.80% -1.80%
13:30 USD Fed’s Mishkin Speaks
17:20 USD Fed’s Fisher Speaks
23:01 GBP UK BRC Retail Sales Monitor Y/Y 3.90% 3.30%
23:30 USD Fed’s Plosser Speaks

http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/

SYDNEY (XFN-ASIA) - The US dollar was firmer against the yen and euro here as traders position themselves ahead of tonight’s release of US gross domestic product for the March quarter, dealers said.

They said a better-than-expected jobless claims report for last week, together with stronger durable goods orders for March, have increased the upside risks for the GDP report and boosted support for the greenback.

“However, all of this could be undone if tonights advance GDP report prints lower than the 1.8 pct growth rate expected,” NAB Capital strategists said.

“Admittedly, with the speculative community quite short the US dollar, a much stronger GDP report would likely trigger a sharp rebound in the US dollar,” they added.

At 9.36 am Sydney (2336 GMT), the dollar was at 119.64 yen from 119.57 in late New York trade while the euro was at 1.3596 usd from 1.3601 in New York.

Dealers said the euro fell from 1.3650 usd levels overnight as traders viewed the US economy may not be too disappointing in terms of growth momentum, while the US dollar rose from 118.65 yen.

The greenback was aided by US weekly initial jobless claims for last week falling to 321,000, compared to market expectations of an improvement to 330,000 from 341,000 claims in the previous week.

However, a Conference Board labor demand index slipped to 30 index points in March from 31 a month earlier.

The NAB strategists said the US dollar’s rebound was also driven by technical buying, especially with the euro failing to break above 1.3666 usd, which triggered profit-taking in the large short greenback positions held by speculators.

They said the US dollar/yen pair was supported by expectations that the Bank of Japan will leave interest rates unchanged following its meeting today, and is also expected to leave its economic forecasts for this current March fiscal year and the next unchanged.

“Indeed, the BoJ is likely to cut its short-term inflation forecast. As such, it’s hard to see the BoJ raising interest rates before Upper House elections due in July,” the strategists added.

Dealers said yen traders will also await today’s release of Japanese consumer inflation, industrial production and retail trade data for the month of March.

The latest University of Michigan Consumer confidence survey for March is also due for release tonight.

Sydney 9.36 am (2336 GMT)

US dollar

119.64 yen

1.2087 sfr

Euro

1.3595 usd

162.64 yen

1.6434 sfr

0.6829 stg

Sterling

1.9902 usd

238.09 yen

2.4062 sfr

Australian dollar

0.8267 usd

0.4153 stg

98.910 yen

New Zealand dollar

0.7400 usd

paul.daniel@xfn.com

WASHINGTON (AP) - A Senate subcommittee meets Thursday to discuss technologies that could help power plants burn coal more cleanly and reduce emissions of carbon dioxide into the atmosphere.

Congress is considering an array of proposed bills aimed at curtailing the release of carbon dioxide and other so-called “greenhouse” gases, including one sponsored by Sen. Jeff Bingaman, D-N.M., that would halt the growth of carbon emissions by 2030, and another by Sen. Barbara Boxer, D.-Calif., who wants to reduce greenhouse gas emissions by 80 percent by mid-century.

Scientists believe unless carbon dioxide and methane emissions are rolled back, the planet will become warmer, potentially causing severe consequences later this century.

A study released last month by Massachusetts Institute of Technology researchers found that finding ways to capture and store emissions of carbon dioxide is the best way to allow the world’s cheapest and most plentiful fuel to meet increasing demands for energy while combatting global warming. Coal accounts for half of the country’s electricity production.

One of the MIT report’s authors, chemical engineering professor Gregory J. McRae, is scheduled to speak at the Science, Technology and Innovation Subcommittee hearing, which begins at 10 a.m.

Other speakers include a representative of the Clean Air Task Force, an environmental group, and executives with Reno, Nev.-based utility Sierra Pacific Resources, Columbus, Ohio-based power producer American Electric Power Co. and Siemens AG, which makes power plants.

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

NEW YORK (AP) - Consumer confidence crumbled in April as rising gasoline prices undermined how Americans feel about the prospects for economic growth, a widely watched gauge of the economy showed on Tuesday.

The New York-based Conference Board said its Consumer Confidence Index dropped to 104.0, in April, down from a revised 108.2 in March. Analysts had expected a reading of 105. The April reading was the lowest since August, when the index was at 100.2.

The Present Situation Index, which measures how shoppers feel now about economic conditions, decreased to 131.3 from 138.5 in March. The Expectations Index, which measures consumers’ outlook for the next six months, declined to 85.8 from 87.9.

“Unlike the decline in March, which was solely the result of apprehension about the short-term outlook, this month’s decline was a combination of weakening expectations and a less favorable assessment of present-day conditions,” said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement. “Rising prices at the gas pump continue to play a key role in dampening consumers’ short-term expectations.”

Franco noted that the decline in the Present Situation Index — the first decline in six months — needs to be watched closely in the months ahead.

Consumer spending accounts for two-thirds of all U.S. economic activitiy.

Although the nation’s retailers reported strong sales in March, analysts are concerned about a slowdown in business in the coming months. A number of problems — rising gas prices, a rougher housing market and the specter of higher interest rates — may force consumers to spend less.

While gas prices rise — the average price is $2.869, up about 33 percent over a two-month period — the housing market continues to weaken.

The National Association of Realtors reported on Tuesday that sales of existing homes plunged in March by the largest amount in nearly two decades, reflecting bad weather and increasing problems from loans to people with poor credit. The group said that sales of existing homes fell by 8.4 percent in March, compared to February. It marked the biggest one-month decline since a 12.6 percent drop in January 1989. The drop left sales in March at a seasonally adjusted annual rate of 6.12 million units, the slowest pace since June 2003.

The report also showed an eighth straight fall in median home prices, the longest such period of declining prices on record. The median price fell to $217,000, a drop of 0.3 percent from the price a year ago.

Also on Tuesday, a housing index released by Standard & Poor showed that U.S. home prices fell 1.5 percent in February from a year ago, the steepest decline in nearly 15 years.

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.