Forex - BoJ is expected to cut rate from the actual 0.3% on Friday

Forex News and Events: The Dollar posted its biggest one-day rise against the Yen in more than a month on Thursday as speculation mounted that the Japanese government may intervene to halt its currency's advance. The Dollar also rose against the Euro as some investors took profits after the single currency's sharp gains in recent sessions. The Yen fell a day after hitting its highest level in more than 13 years after Japanese authorities stepped up their rhetoric against a stronger currency, which is hurting the nation's exporters. Japanese Finance Minister Shoichi Nakagawa said on Thursday he is watching the currency market "with a sense of urgency." He refrained from commenting on whether the ministry would intervene, but added that it has the option to do so. On Thursday, UsdJpy rose 2.6% to 89.56, after hitting a session high at 90.03. It was at 87.14 on Wednesday, the lowest level in more than 13 years. EurUsd was down 0.78% at 1.4293. It had earlier risen to 1.4720, the highest level since September 25th. GbpUsd dropped 3.04% to 1.5035 after having hit 1.4882 low. UsdChf was up 0.5% to 1.0793 rebounding from 1.0414 session low. The Bank of Japan will announce its interest-rate decision at the end of its two-day policy meeting on Friday, and analysts said the Federal Reserve's aggressive rate cut on Tuesday has raised pressure on the BoJ to cut rates. Poll of economists expect the Japanese central bank to cut rates from the current 0.3%. The Dollar rebounded from a nearly 3-month low against the Euro after it sold off sharply following the Fed's rate decision on Tuesday. Adding to pressure on the Euro was an announcement from the European Central Bank that it would widen its interest-rate corridor and cut the return it gives banks for holding cash at the bank. The rate of the deposit facility will be reduced from 50 to 100bp below the rate of the main refinancing operation. Declines in the Dollar gained momentum earlier this week after the Fed's big rate cut switch the yield differential in favor of the single euro-zone currency. Analysts said also the Euro's latest rise may give the ECB room to cut interest rates again next month rather than leave it unchanged as expected by some investors.

Today's Key Issues (time in GMT): 07:00 EUR November German Producer prices -1% vs 0% (mom) 07:00 EUR November German Producer prices -5.9% vs 7.8% (yoy) 07:45 EUR December French Business climate 78 vs 80 12:00 CAD November CPI BoC Core 0% vs -0.2% (mom) 12:00 CAD November CPI BoC Core 1.7% vs 1.7% (yoy) 12:00 CAD November CPI inflation -0.7% vs -1% (mom) 12:00 CAD November CPI inflation 1.6% vs 2.6% (yoy) 00:00 JPY Bank of Japan rate decision 0% vs 0.3%

The Risk Today: EurUsd Market rose as high as 1.4720 yesterday bur reversed most of its gain at 1.4293 or -0.78%. Uptrend remains and room is open for 1.4867 23rd October high. A return over 1.5000 will confirm release of the 3-month pressure and may put key resistance 1.6000 into focus. On the downside, 1.3899 and 1.3600, former resistances, hold supports. Further support holds 1.2208 trendline support. Next long-term support holds 1.1640 November 2005 low and therefore 1.0739 September 2003 low. GbpUsd Market reversed most of Cable gains from the last days and traded as low as 1.4882. Sentiment remains mixed but renewed strength may open the way to 1.6075 (38.2% retracement of 1.8669 – 1.4471 decline) and even 1.6570 (50% retracement). Uptrend may look for 1.6673 30th October high strong resistance. Further resistance holds 1.7816 (50% retracement of 2.1161-1.4471 decline). On the downside, former resistance 1.5462 holds support). Strong supports hold 1.4471 December low ahead of 1.3682 March 2001 low. UsdJpy UsdJpy was heavily under pressure for the last 5 days trading as low as 87.29 Wednesday but recovered yesterday to 90.03 high. 87.29 may hold initial support. Further downtrend may open 79.70 April 1995 low. On the upside, strong resistance holds 100 pivot point, but only a recovery over 103 upper trendline and 105 pivot point will put focus again on 108 and 110.67 15th August high. Initial resistance holds 93.91 ahead of 97.43 24th November high. UsdChf Market traded as low as 1.0414 yesterday, following 8 days of downtrend, but recovered to 1.0793 on profit taking. Further weakness may open the way down to 1.0692 22nd September low and as well as 1.0500 and 1.0375. Such a move may look for 1.0013 15th July low in front of 0.9637 17th March low. Renewed up and over 1.2298, 21st November high, strength may look for 1.2463 strong resistance ahead of 1.2506 (61.8% retracement of 1.4278 – 0.9639 decline). Former support 1.0955 holds minor resistance.

Resistance and Support: EURUSD GBPUSD USDJPY USDCHF 1.6000 K 1.9363 S 110.67 K 1.2573 T 1.5000 S 1.6570 S 100.00 P 1.2463 S 1.4867 S 1.5649 M 93.93 M 1.0955 M 1.4300 1.5075 89.45 1.0780 1.3899 M 1.4471 M 87.29 M 1.0500 K 1.3600 S 1.4042 S 85.00 P 1.0013 P 1.2430 T 1.3682 T 79.70 T 0.9637 K S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot