Forex Investment

Action Insight | Written by ActionForex.com | Jan 18 07 07:37 GMT |
Forex Daily Technical Report Yen Weakens after BoJ on Hold, US CPI awaited

The Japanese yen weakens across the board again after BoJ kept rate unchanged at 0.25% today by a 6-3 vote. In the monthly report, BoJ note that developments in Japan’s economy have “deviated slightly downward” from October’s forecast due to weaker than expected private consumption. Still the economy is expected to expand moderately. USD/JPY surged to above 121 level and is set to test 121.38 resistance.

Focus today will be on a series of US economic data including CPI inflation, housing and Philly Fed survey. After being flat in Nov, CPI is expected to pick up and increase 0.4% mom, 2.4% yoy in Dec, with core CPI rising 0.2% mom, 2.6%. Core CPI has reached a peak at 2.9% last September and moderated to 2.6%. The question remains on whether core inflation is still moderating or have already stabilized. With a 2.6% core inflation, it’s still early for the Fed to change its ‘predominant’ concern from inflation to growth yet.

After a rebound to 1.59M annualized rate in Nov, housing starts is expected to fall mildly to 1.56M. That is still above Oct’s low of 1.49M and suggest that housing market’s slowdown continues to stabilize. On the other hand, building permits is expected to stay flat at 1.51M too. Philly Fed business conditions index is expected to bounce back to 3 in Jan from a upwardly revised -2.3 in Dec. EUR/USD

Daily Pivots: (S1) 1.2905; (P) 1.2927; (R1) 1.2958; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

EUR/USD recovers further today and is now pressing 4 hours 55 EMA (now at 1.2975). At this point, consolidation from 1.2867 is probably still in progress and above 1.2988 resistance will encourage further recovery. But still, we’d expect upside to be limited by 1.3052 cluster resistance (38.2% retracement of 1.3364 to 1.2867 at 1.3057) and bring decline resumption. On the downside, below 1.2896 minor support bring retest of 1.2867 low. Break will confirm fall from 1.3296 has resumed for next downside target of 1.2760 support.

In the bigger picture, with a break of 1.2922 cluster support (50% retracement of 1.2483 to 1.3362 at 1.2923), and bearish divergence condition in weekly MACD, a medium term top could be already in place a 1.3364. Sustained break of 1.2760 will have 161.8% projection of 1.3364 to 1.3051 from 1.3296 at 1.2790 and possibly medium term rising channel line (now at 1.2718) taken out. This will add much weight to the case that whole medium term up trend from 1.1639 has completed. Focus will then be on 1.2483 cluster support (50% retracement of 1.1639 to 1.3364 at 1.2502). Decisive break of this cluster support will confirm this case and have medium term outlook turned bearish.

On the upside, a break of 1.3052 cluster resistance will indicate the fall from 1.3364 has possibly completed after drawing support from resistance line (1.2978 to 1.2937, now at 1.2859). Focus is turned back to 1.3296 resistance but a break of 1.3364 is needed to indicate rise from 1.2483 has resumed. Otherwise, medium term outlook is, at best, neutral.

GBP/USD

Daily Pivots: (S1) 1.9625; (P) 1.9673; (R1) 1.9744; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

Cable’s rise from 1.9261 resumes and strengthens to as high as 1.9742 so far. At this point, further rally is expected to follow towards 1.9750 resistance. As discussed before, break of 1.9750 will encourage further rise towards 1.9846 high.

On the downside, below 1.9675 will argue that a short term top is formed, probably with bearish divergence condition in 4 hours MACD too. Focus will then shift to 1.9587 support. Touching of 1.9587 will confirm that a short term top is formed and should bring lengthier consolidation. But even in such case, downside is expected to be above 1.9452 resistance turned support and bring rally resumption.

In the bigger picture, correction from 1.9846 has completed after three waves down to 1.9261. Break of 1.9846 high will confirm that rally from 1.8517 has resumed for next upside target of 138.2% projection of 1.8090 to 1.9142 from 1.8517 at 1.9917. However, close attention will be paid to sign of loss of upside momentum and reversal pattern formation as cable approaches key cluster resistance of 2.0106 (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067). On the downside, it will take a break below 1.9452 support will argue that the whole rise from 1.9261 has completed and shift short term focus back to the downside.

USD/CHF

Daily Pivots: (S1) 1.2443; (P) 1.2478; (R1) 1.2505; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/.

USD/CHF continues to be bounded in sideway trading between 1.2408 and 1.2528. As discussed before, further consolidation is still in favor as long as USD/CHF stays below 1.2528 high. Below 1.2480 will encourage further pull back to 38.2% retracement of 1.2111 to 1.2528 at 1.2369). But downside should be contained by 1.2270 cluster support (38.2% retracement of 1.1878 to 1.2528 at 1.2280, 61.8% retracement of 1.2111 to 1.2528 at 1.2270) and bring further rally. On the upside, above 1.2528 will indicate recent rally has resumed for 161.8% projection of 1.1878 to 1.2268 from 1.2111 at 1.2742 first.

In the bigger picture, previous break of 1.2343 resistance has opened up a few possibilities. Decisive break of 1.2501 projection level will start to argue the rise from 1.1878 is of impulsive nature. In other words, the whole down trend from 1.3283 could have completed and the current rise from 1.1878 could be a resumption of the medium term rebound from 1.1288 to 1.3283. Further rally should be seen to 1.2768 resistance first. But still, a strong break of 1.2768 cluster resistance is needed to confirm such case. Otherwise, USD/CHF will just be bounded in choppy range trading between 1.1878 and 1.2768.

Meanwhile, on the downside, a sustained break of 1.2270 cluster support will suggest that the whole rebound from 1.1878 has possibly completed and put focus back to 1.2110 support. Break will shift focus back to the downside for 1.1878 low.

USD/JPY

Daily Pivots: (S1) 120.37; (P) 120.61; (R1) 120.89; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

USD/JPY’s rise from 117.96 resumes today by reaching above 121 level and is set to test 121.38 resistance (05 high). At this point, further rise is expected to follow as long as USD/JPY stays above 120.45 support. Break of 121.38 will encourage further rise towards 100% projection of 114.41 to 119.68 from 117.96 at 123.23 first.

However, failure to sustain above 121.38 and a pull back to below 120.45 support will indicate a short term top is possibly formed with bearish divergence condition in 4 hours MACD and RSI. In such case, further pull back should be seen towards 4 hours 55 EMA (now at 120.04). But downside should be contained by 119.68 and bring rally resumption. Break of 119.68 is needed to shift short term focus to the downside.

In the bigger picture, sustained break of 119.86 resistance confirmed that whole rally from 108.99 has resumed for 121.38 resistance As discussed before, fall from 121.38 to 108.99, with its three wave nature, should either represent the correction to whole year long up trend from 101.65 to 121.38, or part of such correction. That is, the medium term rally from 108.99 is either resumption of the whole up trend from 101.65 or a rising leg of consolidation pattern that started at 121.38. Favor is still in the former case as long as USD/JPY stays above 114.41 support or before sign of reversal.

Also, note that the current rally has pushed USD/JPY above multi-year falling trend line (147.68 to 135.20, now at 117.65) again. Sustained break of 121.38 resistance will confirm that whole up trend from 101.65 has resumed.

Forex News Digest

http://www.bloomberg.com/apps/news?pid=20601087&sid=awPivYY7UZkU&refer=home

http://c.moreover.com/click/here.pl?r773158708
Thu, 18 Jan 2007 03:26:00 GMT from Reuters

http://c.moreover.com/click/here.pl?r773156671
Thu, 18 Jan 2007 03:24:00 GMT from Canoe Money

http://c.moreover.com/click/here.pl?r773099332
Thu, 18 Jan 2007 02:16:00 GMT from Yahoo! Singapore

http://c.moreover.com/click/here.pl?r773090631
Thu, 18 Jan 2007 02:09:00 GMT from ABC Money

http://c.moreover.com/click/here.pl?r773072472
Thu, 18 Jan 2007 01:50:00 GMT from India Daily

http://c.moreover.com/click/here.pl?r773058883
Thu, 18 Jan 2007 01:36:00 GMT from Reuters Canada

http://c.moreover.com/click/here.pl?r773023136
Thu, 18 Jan 2007 00:54:00 GMT from Bloomberg

http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:50 JPY Japan Tertiary industry M/M Nov -0.30% -0.10% 2.10%
04:00 JPY BOJ rate decision Jan 0.25% 0.25% 0.25%
05:00 JPY Japan Leading indicator (rev.) Nov 18.2 N/A 20
06:00 JPY BOJ monthly report
10:00 CHF Swiss ZEW indicator Jan N/A -23.7
13:30 USD U.S. CPI M/M Dec 0.40% 0.00%
13:30 USD U.S. CPI - X M/M Dec 0.20% 0.00%
13:30 USD U.S. CPI Y/Y Dec 2.40% 2.00%
13:30 USD U.S. CPI - X Y/Y Dec 2.60% 2.60%
13:30 USD U.S. Jobless claims Dec 314 K 299 K
13:30 USD U.S. Real earnings Dec 0.20% 0.20%
13:30 USD U.S. Housing starts Dec 1.56 M 1.59 M
13:30 USD U.S. Building permits Dec 1.51 M 1.51 M
17:00 USD U.S. Philadelphia Fed survey Jan 3 -2.3

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

(Updating with analyst comment)

LONDON (AFX) - UK raw materials costs recorded their biggest rise in seven months during February, driven by higher oil prices, while manufacturers were also able to pass on some of these recent increases, official figures showed today.

The Office for National Statistics revealed that input prices on a seasonally adjusted basis jumped by 1.3 pct in February from January. This is the biggest monthly rise since July last year and reflects the rise in crude oil prices seen during the month.

The reading is well above analysts’ expectations for a much more modest rise of 0.7 pct and follows a 2.5 pct fall the previous month, revised down from the earlier estimate of a 2.0 pct drop.

On a year-on-year basis, input prices fell by 1.0 pct, in line with forecasts. In January, prices slumped by 2.1 pct, bigger than the previous estimate of a 1.7 pct fall.

Meanwhile, today’s release also showed a further rise in factory gate prices, giving further evidence that manufacturers have been able to pass on some of the recent sharp rises in raw materials costs by pushing up prices.

This will increase concerns among rate-setters at the Bank of England that manufacturers are increasing their prices in order to rebuild their margins which suffered last year from the sharp rises in energy costs.

The data were firm on two levels, with both input prices and core output prices coming in on the strong side, said Investec economist David Page.

Though the figures will not give undue concern to the Bank of England’s Monetary Policy Committee, the fact that output prices have not been slowing could be interpreted by the hawks on th committee as pointing to medium-term inflationary pressures, he said.

“Overall this plays into the hands of the ‘one more hike’ argument”.

The Bank of England has raised interest rates three times since August last year to 5.25 pct and is broadly expected to hike by a further quarter point sometime over the coming months.

Today’s data also showed that on a non-seasonally adjusted basis, output prices rose a monthly 0.3 pct in February, down on January’s upwardly revised 0.4 pct rise and in line with analysts’ expectations.

On year-on-year basis, output prices were 2.2 pct higher, unchanged from January’s increase — revised up from 2.1 pct previously — and slightly above expectations for a 2.1 pct increase.

The statistics office said the rise in February was mainly due to a 1.4 pct increase in other manufactured product prices. Within this, there was a 10.7 pct increase in recovered secondary raw materials, mainly scrap metal, and a 4.2 pct rise in ’sharped’ and processed flat glass, the largest monthly rise since records began in 1991.

As a result, the core measure of output prices, which excludes food, beverages, tobacco and petroleum, rose well above expectations during the month.

On a seasonally-adjusted basis, core output prices were up by 0.5 pct in February from January, the biggest monthly rise since April last year and up on a 0.2 pct gain the previous month.

On an annual basis, the core rate jumped by 2.7 pct, the biggest increase since June last year and well above expectations for a much more modest 2.3 pct rise.

jessica.mortimer@thomson.com

ss

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Action Insight | Written by ActionForex.com | Nov 07 07 13:52 GMT |
Forex Mid-Day Technical Report Dollar’s Free Fall Continues, EUR/USD Hits 1.47, GBP/USD Hits 2.1

Dollar’s free fall continues today as talk of China’s reserve diversification dominates the market. Cheng Siwei, vice chairman of China’s National People’s Congress, said that China will “readjust” the $1.43 trillion of foreign-exchange reserves, favoring “stronger currencies over weaker ones”. This suggest that China may diversify further away from the dollar. Also, not that the largest holder of US treasures, China and Japan, has already reduced their treasury holdings this year, with China’s holding down 5% to $400b while Japan’s down 15% to $586b. The news triggered concern that dollar could continue to lose its status as the world currency and other central banks may follow to move away from it.

In addition, other dollar bearish theme continue to play, including concern on extended housing market downturn, further rate cut from Fed on credit market problems, record oil prices, new the century mark of $100 a barrel and commodity prices as well as expectation for either further rate hike or no move from other major central banks in the near term.

Technically speaking, EUR/USD, making new record high, has now taken out 1.45 level decisively and is set to challenge next important psychological resistance of 1.5. GBP/USD has also made 26 years high and touched 2.1 level. Tentatively, USD/JPY’s sharp fall from 124.13 is treated as resumed and is set to test 111.59 low and then 110. USD/CHF took out 04 low of 1.1288 and is set to challenge 95 low of 1.1. USD/CAD remains extremely weak and is heading to 0.9, just 3 months after it breached parity. Aussie continues to make new 23 year high

Meanwhile, note that the overall outlook in the Japanese yen is less clear as carry trade is still a major factor in yen’s movements. Yen crosses surges initially today, boosted by strength in major currencies other then dollar and yen, even though USD/JPY dipped sharply. However, as yen crosses quickly reversed following decline in European stock markets.

Overnight, RBA hiked by 25bps as expected, raising the overnight cash rate to an 11 year high of 6.75%. The accompanying statement maintained a hawkish tone and expect inflation to climb above 3% in Q1 08. Recent credit crunch in the global economy is expected to have little impact in Australia. Markets’ attention is turning to employment report from Australia and New Zealand in the coming Asian session, before BoE and ECB rate decision later tomorrow. EUR/USD

Daily Pivots: (S1) 1.4492; (P) 1.4531; (R1) 1.4596; «www.actionforex.com»

EUR/USD remains very strong today and extends rally to as high as 1.4728 so far. At this point, intraday bias remains on the upside as long as 1.4540 minor support holds. Further rally is expected towards next medium term target of 1.5. Below 1.4613 will turn intraday outlook consolidative first and probably bring pull back to 4 hours 55 EMA (now at 1.4458) but downside should be contained above 1.4348 resistance turned support and bring another rise.

In the bigger picture, medium term rally from 1.1639 is still in force and is being treated as resumption of long term up trend from 0.8223 (00 low) to 1.3668 (04 high). Such rise is expected to extend further to 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 which will overlap with 1.5 psychological resistance.

One the downside, below 1.4348 will indicates that rise from 1.3360 has made a top will turn into lengthier consolidation with further correction into support zone between 1.4014 and 1.4281. But EUR/USD is expected to be supported there and bring rally resumption.

GBP/USD

Daily Pivots: (S1) 2.0817; (P) 2.0861; (R1) 2.0920; «www.actionforex.com»

Cable’s rally continues today and reaches as high as 2.1050 so far, meeting mentioned target of resistance zone of 2.1 psychological resistance and 161.8% projection of 1.9652 to 2.0365 from 1.9879 at 2.1033. At this point, intraday bias remains on the upside as long as 2.0928 minor support holds. Sustained trading above 2.1033 will encourage further rally to next short term target of 200% projection of 1.9652 to 2.0365 from 1.9879 at 2.1305. Below 2.0928 will turn intraday outlook consolidative first and probably bring pull back to 4 hours 55 EMA (now at 2.0743). But downside should be contained above 2.0538 resistance turned support and bring another rise.

In the bigger picture, rise from 1.7047 is treated as resumption of long term up trend from 1.3680. Sustained break of 2.0677 now encourage further medium term rally to next projection target of 100% projection 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.2921. On the downside, a break below 2.0538 support will indicate deeper correction is underway. But still, the rise from 1.7047 should still be in progress as long as 1.9652 medium term support holds.

USD/CHF

Daily Pivots: (S1) 1.1397; (P) 1.1469; (R1) 1.1517; «www.actionforex.com».

USD/CHF dives to as low as 1.1256 today, meeting mentioned target of 1.1288 (04 low) as expected. At this point, intraday bias remains on the downside as long as 1.1401 minor resistance holds. Sustained trading below 1.1288 will encourage further fall to 1.1000 (95 low). Above 1.1401 will turn intraday outlook consolidative first and bring recovery. But upside should be limited by 1.1597 support turned resistance and bring another fall.

In the bigger picture, medium term down trend from 1.3283 (05 high) has now breached medium term support of 1.1288. Such decline is now tentatively treated as resumption of the long term down trend from 1.8305 (00 high) and is set to retest 95 low of 1.1000 first. On the upside, even though a stronger rebound would be seen in case of a break of 1.1597 resistance, break of 1.1891 resistance is needed to indicate fall from 1.2467 has completed. Otherwise, further decline is still in favor after correction.

USD/JPY

Daily Pivots: (S1) 114.37; (P) 114.58; (R1) 114.92; «www.actionforex.com».

USD/JPY’s fall from 117.93 resumes today by taking out 113.23 low and reaches as low as 112.76 so far. At this point, intraday bias remains on the downside as long as 113.67 minor resistance holds. Further decline is expected to retest 111.59 low. Above 113.67 will turn intraday outlook consolidative first but recovery should be limited below 114.79 resistance and bring another fall.

In the bigger picture, current fall from 117.93 is tentatively treated as resumption of whole fall from 124.13. Firm break of 111.59 low will confirm this case and bring decline to next cluster support zone of 61.8% retracement of 101.65 to 124.13 at 110.23 and 61.8% projection of 124.13 to 111.59 from 117.33 at 109.58 first.

On the upside, break of 115.91 resistance is needed to turn short term bias back to the upside and indicate that USD/JPY is still bounded in consolidation that start from 111.59 low.

EUR/JPY

Daily Pivots: (S1) 165.94; (P) 166.49; (R1) 167.54; «www.actionforex.com»

EUR/JPY’s rise was limited at 167.63 earlier today, below 167.72 resistance and retreats from there. Nevertheless, further rally is still in favor as long as 164.95 cluster support (38.2% retracement of 160.46 to 167.63 at 164.89) holds. Break of 167.72 resistance will encourage retest of 168.93 key resistance. However, below 164.95 will turn short term bias back to the downside and retest of 160.46 low could be seen.

In the bigger picture, break of trend line support (137.16, 150.75) confirmed that medium term rally rally from 130.60 has made an important medium term top at 168.93. However, subsequent sharp correction from there to 149.27 was supported by long term rising channel. Hence, long term up trend fro 88.97 (00 low) remains intact. Weekly MACD’s stay above signal line suggests that such correction has likely completed. Rise from 149.27 is tentatively treated as resumption of the long term up trend and sustained break of 168.93 will confirm such case. However, sustained break of 160.46 support and 160.67 cluster support will flip favor back to the case that price actions from 168.93 is developing into a large scale consolidation and retest of 149.27 low could be seen in such case.

Forex News Digest

«www.bloomberg.com»

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«www.bloomberg.com»

«c.moreover.com»
Wed, 7 Nov 2007 09:37:00 GMT from Reuters UK

«c.moreover.com»
Wed, 7 Nov 2007 09:34:00 GMT from Reuters

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Wed, 7 Nov 2007 09:11:00 GMT from Reuters South Africa

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Wed, 7 Nov 2007 09:09:00 GMT from Reuters

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Wed, 7 Nov 2007 09:08:00 GMT from Reuters

«c.moreover.com»
Wed, 7 Nov 2007 08:58:00 GMT from New Zealand Herald

«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
22:30 AUD RBA rate decision Nov 6.75% 6.75% 6.50%
23:01 GBP U.K. N’wide Consumer Confi. Oct 98 97 99
00:30 AUD Australia House price index Q/Q Q3 3.50% 3.00% 3.20%
00:30 AUD Australia House price index Y/Y Q3 10.60% 9.80% 9.20%
11:00 EUR Germany Industrial prod’n M/M Sep 0.30% -0.10% 1.70% 1.90%
11:00 EUR Germany Industrial prod’n Y/Y Sep 6.00% 5.10% 5.10% 5.20%
13:30 USD U.S. Labour cost Q3 -0.20% 1.00% 1.40% 2.20%
13:30 USD U.S. Productivity Q3 4.90% 3.00% 2.60% 2.20%
15:00 USD U.S. Wholesale inventories Sep 0.20% 0.10%

«www.actionforex.com»

BANGKOK (XFN-ASIA) - The Bank of Thailand will allow foreign investors to hedge their investments against future currency fluctuations amid tough capital control measures in the country, the central bank said.

At the same time, the BoT also said it will not yet abolish a December ruling which mandates that 30 pct of all incoming investment must be held by financial institutions for up to one year.

That ruling was designed to curb the nation’s fast-rising currency.

“As of now we will not lift the 30 pct reserve requirement. We have to wait for a while until we are confident that the fully hedged funds can effectively stabilize the baht,” Nitaya Pibulratanakit, an assistant governor at the BoT, said.

The new rules will take effect on March 15, she added.

The BoT had indicated earlier that it would lift the remaining capital controls, which have been gradually eased since they were first introduced.

The controls had sparked the biggest one-day drop in the history of the Thai stock market after they were imposed in December, compelling the government to quickly rescind some of the measures.

“We cannot say that capital controls or the 30 pct reserve requirement have been lifted. But investors can now choose which option they think is best for them,” BoT exchange control official Suchart Sakkankosone told Agence France-Presse.

afp/net

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PARIS (AFX) - The French Treasury said the average accepted 10-year yield at today’s auction of Treasury bonds (OATs) fell to 4.10 pct from 4.12 pct in last month’s auction.

The Treasury allocated 2.420 bln eur of the 3.75 pct OAT due April 2017, compared with bids of 5.590 bln. The bid-to-cover ratio was 2.31.

It also allocated 1.920 bln eur of the 3.75 pct OAT due April 2021, compared with bids of 6.840 bln. The average accepted yield rose to 4.08 pct from last month’s 3.84 pct, and the bid-to-cover ratio was 3.56.

paris@afxnews.com

mjs/jlc

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Copyright AFX News Limited 2007. All rights reserved.

The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.

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