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Forex − Dollar fell as US jobless rate surged and Crude Oil jumped to new highs
Mon, Jun 9 2008, 11:34 GMT
by Peter Rosentreich
ACM - Advanced Currency Markets
Forex News and Events:
The Dollar fell on Friday as an unexpected surge in the US jobless rate, 5.5% in May from 5% in April, revived fears of a deeper and more prolonged economic downturn, diminishing the prospects of Federal Reserve interest rate hikes by year-end. Pressure on the Dollar was also added by the dramatic jump in Oil prices to record highs. There are fears that soaring Oil prices could further damage the US economy, while simultaneously fanning inflation.
Also on Friday, European Central Bank officials appeared to leave little doubt that euro zone rates were set to rise next month, helping to set up the Dollar for its worst weekly loss versus the Euro since late March.
EurUsd climbed to a session peak of 1.5783, its best weekly gain since late March. It traded at 1.5782 late Friday, up 1.19%. GbpUsd rose 0.6% to 1.9704. UsdJpy fell 0.92% to 104.92, pushing away from a high of 106.34. UsdChf dropped as low as 1.0182, the weakest in six weeks. It last traded at 1.0186, down 1.86%. The Yen and Swiss franc tend to attract flows during periods of uncertainty as the countries' low interest rates reflect the capital surplus of their respective countries.
ECB President Jean-Claude Trichet sparked a Euro rally on Thursday when he flagged a July interest rate hike to quell inflation pressures. Trichet's remarks trumped Fed Chairman Ben Bernanke's attempt to talk up the Dollar two days earlier. On Friday, ECB officials reinforced Trichet's message about possible tighter monetary policy after the central bank kept its key refinancing rate at 4%.
US crude oil futures jumped more than $10 per barrel to $139.12 high per barrel, sending stocks on Wall Street tumbling around 3 percent. The drop in equities pushed the Dollar lower versus the Yen and Swiss franc.
Today's Key Issues (time in GMT):
00:00 AUD Holiday in Australia
00:00 USD Holiday in China and Israel
08:30 EUR June Euro-zone Sentix Index 2.9 vs 3.5
08:30 GBP May PPI Core Output 0.4% vs 1.0% (MoM)
08:30 GBP May PPI Core Output 4.7% vs 4.5% (YoY)
08:30 GBP May PPI Input Prices 2.7% vs 2.4% (MoM)
08:30 GBP May PPI Input Prices 24% vs 23.1% (YoY)
08:30 GBP May PPI Output Prices 2.7% vs 2.4% (MoM)
08:30 GBP May PPI Output Prices 24% vs 23.1% (YoY)
12:15 CAD May house starts, annualized 220k vs 213.9k
14:00 CHF SNB’s Roth speaks
14:00 USD April Pending Home Sales change -0.5% vs -1%
16:15 USD Fed’s Geithner speaks about the economy, New York
16:30 EUR ECB’s Trichet speaks in Paris
The Risk Today:
EurUsd Market returns on 1.5800 high late Friday. This is the confirmation Euro is breaking up 1.5400-1.5800 consolidation range. It is reopening the way up to 1.6000 Pivot point resistance ahead of key resistance 1.6200 market target. On downside, a return below 1.5800 might slowdown the uptrend but not open the way down to 1.5000 psychological key level. Support holds 1.5573 Friday low. Initial resistance holds 1.5819 May 27th high.
GbpUsd Cable broke up the upper Trendline resistance of two-month downtrend 2.0398 – 1.9364 late May. But it failed to show strong direction. Trading range is set 1.9460 – 1.9850. Psychological 2.0000 level stays into focus. On the downside, a reversal below 1.9600 might bring again focus on 1.9337 January low and 1.9105 (50% retracement of 1.7049 – 2.1162 advance). Strong support holds 1.9363 20th February and 14th May low.
UsdJpy Market is trading around 105 resistance for the third week. Any profit taking on 105 level might send the market back down to 100 – 104 consolidation trading range. Minor support holds 102.58 May 9th low. Renewed strength over 105 would put 110.10 strong resistance (Trendline) into focus and mid January double top ahead of 111.92 early January high. Initial resistance holds 106.43 Thursday high. Initial support holds 104.87 Friday low.
UsdChf Market broke down 1.0400-1.0600 trading range last week. Trendline resistance holds 1.0625 May 8th high. Early January double top 1.1191 marks strong resistance. Initial support holds 1.0182 last Friday low. Further weakness may open the way toward 0.9639 17th March low.
Resistance and Support:
| EURUSD | GBPUSD | USDJPY | USDCHF |
| 1.6200 T | 2.0447 S | 111.92 K | 1.1191 K |
| 1.6000 K | 2.0100 P | 110.10 T | 1.0625 T |
| 1.5819 M | 1.9800 S | 106.43 M | 1.0525 S |
| 1.581 | 1.972 | 105.15 | 1.019 |
| 1.5573 M | 1.9363 S | 104.87 M | 1.0181 S |
| 1.5366 S | 1.9337 T | 102.60 M | 1.0000 P |
| 1.5000 K | 1.9105 K | 100.00 P | 0.9637 K |
Published on Mon, Jun 9 2008, 11:48 GMT
Archive
- Forex - Higher yielding currencies sink on expectation Central banks rate cuts
Published On Tue, Dec 2 2008, 10:27 GMT - Forex - Friday trading was thin in global risk aversion ahead of Central banks meetings
Published On Mon, Dec 1 2008, 10:35 GMT - Forex - Currency market stayed in tight range on Thanksgiving day
Published On Fri, Nov 28 2008, 10:16 GMT - Forex - Traders expect thin trading buy higher volatility over Thanksgiving
Published On Thu, Nov 27 2008, 10:18 GMT - Forex - Dollar dropped on Tuesday in volatile markets
Published On Wed, Nov 26 2008, 10:41 GMT
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