Forex - Dollar rose against Euro while Yen gained in volatile trading

Forex News and Events: The Dollar rose against the Euro on Friday, while the Yen gained in volatile trading, as financial distress and economic weakness beyond the United States persisted, giving the greenback a safe-haven bid. Weakness in the US stock market has once again supported the Yen versus the Dollar, Euro and other high-yielding currencies as investors unwound trades funded using the Japanese unit's low rates. Investors also fretted about data showing declines in US consumer sentiment and housing construction, which fueled fear that the credit crisis had knocked the economy into recession. Though governments worldwide have started pouring cash into troubled banks, helping reduce the cost of interbank borrowing, investors remain worried about the cost to the real economy from a credit crisis that has persisted for more than a year. Trading was extremely choppy and liquidity was thin, with rapid rises and falls in the US stock market driving currency price moves. EurUsd was down 0.59% at 1.3410. EurJpy fell 0.34% to 136.32. UsdJpy was off its lows and traded up 0.25% at 101.67. Sterling fell 0.32% to 1.7282. UsdChf rose 0.24% to 1.1372. On Friday, data showing US consumer confidence suffered its steepest monthly decline on record in October while new home construction last month hit a 17-1/2-year low followed reports detailing drops in retail sales and industrial output. Signs of trouble also emerged in economies in Eastern Europe and Asia, while investors expect slower euro zone growth to force the European Central Bank to cut interest rates again by year end. For the next couple of weeks, currency investors will continue to monitor developments in the credit and stock markets.

Today's Key Issues (time in GMT): 06:00 EUR September Producer prices -0.5% vs -0.6% (mom) 06:00 EUR September Producer prices 7.5% vs 8.1% (yoy) 08:30 GBP September PSNB £6.9b vs £10.37b 08:30 GBP September PSNCR £10.1b vs £5.12b 12:30 CAD August Securities ForeignC$1b vs –C$5.59b 12:30 CAD August Wholesale trade -1% vs 2.3% 16:00 USD September Leading Indicators -0.2% vs -0.5% 21:45 NZD Q3 Consumer Price Index 1.5% vs 1.6% 21:45 NZD Q3 Consumer Price Index – yr 5.1% vs 4%

The Risk Today: EurUsd Market drove back below 1.3500 pivot level last week. 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. Resistance holds 1.4002 former trendline support. Initial resistance holds 1.3769 Tuesday high. On the downside, renewed weakness will focus on 1.3056 support (retracement of 0.8231 – 1.6039 advance). Initial support holds 1.3259 10th October low. GbpUsd In the last two weeks, Market dropped as low as 1.6786 strong support. It recovered Tuesday at 1.7631 intraday high. Trading range holds 1.6786 - 1.7631. On the upside, strong resistance holds 1.7697 last week high ahead of 1.8304 former support. But renewed downtrend may look for 1.6568 November 2003 low and 61.8% retracement of 1.3682–2.1161 advances). Following supports are 1.4560 trendline and 1.3682 March 2001 low. UsdJpy Downtrend started in September is still running and hit 97.91 on Friday 10th October. Last week market 103.07 rebound marks initial resistance. On the further upside, recovery over 105 pivot point will put focus again on 108 and 110.67 15th August high. On the downside, renewed pressure may open the way to 95.75 17th March low. Current downtrend will stand below 103 upper trendline resistance. UsdChf Market posted 1.1491 last week. Further advance may open the way to 1.1596 December high and strong resistance. Initial support holds 1.1129 October 10th low. On the downside, only weakness below 1.0692, 22nd September low, would give direction down to 1.0500 and 1.0375. Such a move may look for 1.0013 15th July low in front of 0.9637 17th March low.

Resistance and Support: EURUSD GBPUSD USDJPY USDCHF 1.5000 P 1.9363 S 110.67 T 1.2153 T 1.4867 S 1.8304 M 105.00 S 1.1596 S 1.3769 M 1.7697 S 103.07 M 1.1491 M 1.3475 1.7375 101.90 1.1340 1.3360 T 1.6786 M 100.00 P 1.1129 M 1.3259 M 1.6568 S 97.91 M 1.0692 S 1.3056 T 1.4560 T 95.75 T 1.0005 K S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot