Forex - Yen rose as FX investors are running away from riskier assets
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News and Events:
The Japanese Yen hit a 1-1/2 year high against the Dollar on Friday as fears of wider credit-related losses at US financial firms dulled investors' appetite for risk, causing an unwinding of carry trades. Moves to cut back on carry trades, which involve borrowing low-yielding currencies such as the Yen to fund purchases of higher-yield currencies and assets, sparked the biggest weekly drop in the Dollar against the Yen since March. A report that showed falling house prices and high energy costs had pushed US consumer confidence to its lowest level in two years added to the Dollar's woes and led investors to bet on more interest-rate cuts from the Federal Reserve. The UsdJpy dropped as low as 110.50, its lowest level against the Japanese currency since May 2006. It was last trading at 110.65, down 1.8% on the day. The Yen also rose on the crosses, with the EurJpy dropping 1.8% to 162.48. Analyst said a dollar drop to 110 yen and possibly beyond is likely early next week and other analysts predicted Dollar selling will pick up even more steam if forthcoming US retail sales data disappoints. The EurUsd hit a peak of 1.4752, its highest level since its inception in 1999. It was last trading at 1.4679 steady with levels seen late Thursday. An unexpected narrowing in the US trade deficit in September afforded the Dollar some respite against the Euro, traders said. But fears that more US financial firms will be hit by credit market turmoil escalated on Friday after Wachovia Corp said it had incurred about $1.1 billion of further losses from the credit market crisis and that it expects increased loan losses in the fourth quarter. Speculation was in the market talks that British bank Barclays Plc was about to announce a $10 billion write-down. Barclays denied the rumors. GbpUsd fell 0.83% to 2.0903, retreating from 26-year 2.1161 high. The AudUsd dropped 1.64% to 0.9117, descending from 23-1/2-year 0.9400 peaks scaled on Wednesday. The NzdUsd dropped 1.57% to 0.7643, while the UsdCad climbed 1.07% to 0.9448.
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Today's Key Issues (time in GMT):
00:00 GBP US Holidays – Veterans Day
09:30 GBP Oct PPI Input 1.5% vs 3.2% (MoM)
09:30 GBP Oct PPI Input 7.1% vs 6.4% (YoY)
09:30 GBP Oct PPI Output 0.2% vs 0.1% (MoM)
09:30 GBP Oct PPI Output 3.3% vs 2.7% (YoY)
09:30 GBP Oct PPI Output Core 0.2% vs 0.2% (MoM)
09:30 JPY Oct PPI Output Core 2.2% vs 2.2% (YoY)
23:50 JPY 3Q Gross Domestic Product 0.4% vs -0.3% (QoQ)
23:50 3Q GDP annualized 1.7% vs -1.2% (QoQ)
00:00 Nov 13 Bank of Japan Target Rate 0.5% vs 0.5%
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The Risk Today:
EurUsd may be reversing after having touched Friday 1.4752 new historic high. This was just over the Trendline resistance at 1.4730. On the downside, market may recover on profit taking down to 1.4500 and a return below 1.4280 former resistance, which would threaten the uptrend and reopen the way down toward 1.4000 nearby support and 1.4125 trendline support. Initial support holds 1.4500 former key level.
GbpUsd Cable dropped 0.83% on Friday after having hit 2.1161 26-year high. This is the largest drop since October 22nd. Recent high put 2.1355 May 11th 1981 into focus. On the downside, this morning opening drop to 2.0868 may open the market reversal. But it would need renewed growing pressure below 2.1000 and further weakness toward 2.0500 psychological levels to confirm a trend change. Strong support holds 2.0654 former resistance.
UsdJpy Trend remains bearish. Renewed pressure pushed toward 112.10 on Friday and is testing today the ultimate 111.60 (August 17 low) into. Market posted new 2-year low at 109.85. On the upside, market needs a return over 114 and 116 to undermine the actual downtrend. This may open the way toward 117.63 resistance.
UsdChf is consolidating from last 3-week downtrend. It posted a fresh low 1.1189 on Friday, near 12-year low 1.1110 from April 1995. Last week break of 1.1500 pivot point holds initial resistance. Extreme target holds 1.1000 key level. It would need a return over 1.1500 and 1.1640 level to relieve actual bear threat.
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Resistance and Support:
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EURUSD |
GBPUSD |
USDJPY |
USDCHF |
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1.5000 K |
2.1355 K |
119.06 T |
1.1923 S |
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1.4730 T |
2.1161 T |
117.63 S |
1.1640 T |
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1.4703 M |
2.1000 M |
114.00 M |
1.1500 P |
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1.4635 |
2.0815 |
110.35 |
1.1260 |
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1.4500 K |
2.0654 S |
109.85 M |
1.1210 M |
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1.4400 M |
2.0500 P |
109.00 S |
1.1110 T |
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1.4280 S |
2.3070 S |
108.77 S |
1.1000 K |
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S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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 forex-news_11-12-07 -
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