Forex - BoE and ECB left rates unchanged, but ECB lowered its growth outlook for 2009.
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Forex News and Events:
The Dollar rallied yesterday to its highest against the Euro this year after the European Central Bank cut its growth outlook for Euro-zone, boosting the investors outlook for interest rate cuts later this year.
The Euro took a deep loss after the Chairman of euro zone finance ministers, Jean-Claude Juncker, said the currency was still effectively overvalued despite its recent fall. Euro zone economic uncertainty was "particularly high," ECB president Jean-Claude Trichet said after the bank left its benchmark lending rate at 4.25% on Thursday. But he cautioned inflation remains high and risks are to the upside. The ECB staff now forecasts growth in the euro zone for 2008 at between 1.1 and 1.7%. For 2009 it forecasts growth between 0.6 and 1.8%.
Yesterday, EurUsd dropped 1.77% to 1.4259 after falling as low as 1.4213, its lowest since December 2007. EurJpy also fell to its lowest since March and traded down 3.4% at 151.91. UsdJpy fell 1.65% to 106.54 after hitting intraday 105.70 low. UsdChf rose only 0.09% at 1.1061 close reversing from earlier 1.1132 high. GbpUsd fell 0.85% to 1.7600, reversing early gains following the Bank of England's decision to leave interest rates unchanged at 5%. EurGbp was last down 0.93% at 0.8102 after posting 0.8182 intraday high.
On economic data, Dollar had limited reaction to reports showing private-sector job contraction of 33k last month, in line with forecasts, while the number of people filing for jobless benefits rose by 15k in the latest week.
Investors will have a better idea of how the US labor market is weathering the economic slowdown on Friday when the Labor Department releases its August nonfarm payrolls report.
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Today's Key Issues (time in GMT):
10:00 EUR July Germany Industrial output -0.5% vs 0.2% (mom)
11:00 CAD August Employment change 8k vs -55.2k
11:00 CAD August Employment rate 6.2% vs 6.2%
12:30 USD August Manufacturing payrolls -35k vs -35k
12:30 USD August Non-farm payrolls -75k vs -51k
12:30 USD August Unemployment 5.7% vs 5.7%
12:30 USD Q2 Labor costs revised 0.1% vs 1.3%
14:00 CAD August Ivey PMI 62.5 vs 65.5
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The Risk Today:
EurUsd Market dropped as low as 1.4213 yesterday. Further weakness will put the focus on strong support 1.4126 22nd October low. On the upside, only a return over 1.5000 and 1.5500 will release actual pressure and put key initial resistance 1.6000 into focus. Still a break up there would open the way to Trendline resistance 1.6200.
GbpUsd Cable dropped to 1.7563 low yesterday. Early week sharp move broke 1.7936 19th April high. Strong support holds 1.7251 3rd April low. On the upside, initial resistance holds 1.8795 last 2-weeks high. Former support 1.9363 holds also strong resistance. Key level holds 2.0100 resistance.
UsdJpy Market broke yesterday the 6-month lower trend line support at 107.90. It posted 105.70 low. Further pressure may open the way toward 105 pivot (38.2% retracement of 95.75 – 110.67 advance), as well as 102.73 support and 100 pivot point. Initial support holds 105 strong support.
UsdChf Market rose as high as 1.1172 Wednesday. Initial resistance holds again 1.1131 Tuesday high. Strong resistance holds 1.1593 December 2007 high. On the downside, initial support holds 1.0863. Only renewed weakness below 1.0500 and 1.0375 would retest the 1.0000 pivot point and may open the way toward 0.9637 17th March low.
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Resistance and Support:
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EURUSD |
GBPUSD |
USDJPY |
USDCHF |
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1.6000 K |
2.0100 K |
111.92 K |
1.2153 T |
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1.5500 P |
1.9363 S |
110.67 M |
1.1192 K |
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1.5000 S |
1.8723 M |
109.18 M |
1.1072 M |
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1.4280 |
1.7590 |
106.75 |
1.1130 |
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1.4221 M |
1.7563 M |
105.70 M |
1.0863 S |
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1.4213 M |
1.7500 S |
105.00 P |
1.0500 K |
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1.4126 S |
1.7251 S |
102.73 S |
1.0000 P |
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S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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