Forex - Dollar was mixed on Thursday on fear of further bank failures

Forex News and Events: The Dollar edged higher on Thursday against Sterling and Swiss franc as short term interest rates for Dollars continued to rise on global money markets, despite coordinated efforts by many central banks this week to ease the credit crisis. Despite unprecedented efforts by central banks to increase liquidity in money markets and lower borrowing costs, the fear of further bank failures continued to slow inter-bank lending and led corporations, funds, and banks to accumulate Dollars. Yesterday, EurUsd rose 0.19% at 1.1312. UsdJpy was down 0.72% at 99.04, after dropping to a 6-month 98.51 low. UsdChf rose 0.19% to 1.1312. GbpUsd dropped 1.14% to 1.7029 having posted 1.7397 high. Dollar is mostly under pressure ahead of Group of Seven meeting of finance ministers and central bankers on Friday in Washington would follow Wednesday's coordinated rate cuts with bold steps to unblock the flow of credit in global markets. Markets are looking to the G7 meeting, as well as a broader meeting of G20 countries over the weekend, for a more coordinated approach to the global financial crisis. Markets also expect central banks around the world to cut rates further after the Fed, the ECB and the central banks of Canada, England, China, Sweden and Switzerland cut rates simultaneously on Wednesday. US stocks fell to new five year lows, Dow Jones industrial closing below 9000 for the 1st time since June 2003, and long dated US Treasury bond yields rose, while investors in emerging markets ran to the safety of Dollars and even Gold in risk aversion.

Today's Key Issues (time in GMT): 05:45 CHF September Unemployment rate 2.6% vs 2.5% 06:45 EUR August French Industrial output -0.4% vs 1.2% (mom) 07:30 DKK September CPI 4.2% vs 4.3% (yoy) 08:00 NOK September Consumer price index 4.7% vs 4.5% (yoy) 08:00 NOK September core inflation 2.8% vs 2.8% 11:00 CAD September Employment change 9k vs 15.2k 11:00 CAD September Employment rate 6.2% vs 6.1% 12:30 USD September Export prices -0.4% vs -1.7% 12:30 USD September Import prices -2.5% vs -3.7% 12:30 USD September International trade -$58.8b vs -$62.2b 12:30 CAD August New housing price index 0.1% vs 0.1% 12:30 CAD August Trade Balance C$4.5b vs C$4.85b 18:00 USD September Federal budget $70b vs $112.9b 00:00 USD G7 finance ministers meet in Washington

The Risk Today: EurUsd Early week strong pressure hit strong support 1.3666 December 2004 high and broke below 1.3500. Further weakness will focus on 1.3056 support (retracement of 0.8231 – 1.6039 advance). Initial support holds 1.3443 Monday low. On the upside, only a return over 1.4000 and 1.5000 will release actual pressure and may put key initial resistance 1.6000 into focus. Still a break up there would open the way to Trendline resistance 1.6200. Initial resistance holds 1.4002 former trendline support. GbpUsd This week events pushed the market as low as 1.6786 today, now initial support, far away from former support 1.7422 (50% retracement of 1.3682 – 2.1161 advance). Further downtrend may look for 1.6568 November 2003 low and 61.8% retracement of 1.3682–2.1161 advances). Next supports are 1.4560 trendline and 1.3682 March 2001 low. On the upside, initial resistance holds 1.7697 this week high ahead of 1.8304 former support. UsdJpy Downtrend is set since beginning of September and hit 97.91 low this morning. Further pressure may open the way to 95.75 17th March low. Current weak trend will stand below 100 pivot point. On the further upside, recovery over 105 pivot point will put focus again on 108 and 110.67 15th August high. UsdChf Market posted 1.1489 high on Monday. Further advance may open the way to 1.1596 December high and strong resistance. On the downside, only weakness below 1.0692, 22nd September low, would strongly undermine the current trend and open the way down to 1.0500 and 1.0375. Such a move may also test the 1.0013 15th July low in front of 0.9637 17th March low.

Resistance and Support: EURUSD GBPUSD USDJPY USDCHF 1.5280 K 1.9363 S 110.67 T 1.2153 T 1.5000 P 1.8304 S 105.00 S 1.1596 S 1.4202 M 1.7697 M 100.00 P 1.1489 M 1.3625 1.6895 99.05 1.1170 1.3443 M 1.6786 M 97.91 M 1.0692 S 1.3360 T 1.6568 S 96.85 M 1.0500 K 1.3056 T 1.4560 T 95.75 T 1.0013 P S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot