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Forex − Dollar rose after the $700bio rescue package vote by Congress

Mon, Oct 6 2008, 11:29 GMT
by Peter Rosentreich

ACM - Advanced Currency Markets

Forex News and Events:

The Dollar rose versus the Euro on Friday as the approval of a $700bio rescue package by Congress for the US financial sector left investors believing that Europe might not have adequate measures to deal the credit crisis.

The US House of Representatives voted 263-171 to pass the bailout plan, after the US Senate approved it on Thursday night, and President George W Bush promptly signed it. The measure will allow the US Treasury to buy illiquid mortgage assets from banks. The dollar initially slipped against the Euro after the House passed the bill as traders who had bet on Congressional approval took profits.

French President Nicholas Sarkozy has meet Sunday the leaders of Germany, Italy and Britain, as well as senior EU officials and European Central Bank President Jean-Claude Trichet on Saturday to try to find a common European approach to the international banking crisis.

EurUsd was unchanged at 1.3781, after hitting a 13-month low of 1.3703. UsdJpy was last up 0.32% at 105.34, after rising to a session peak of 106.15. EurJpy was up 0.27% at 145.15. UsdChf was 0.5% lower at 1.1287 after posting 1.1403 high on Friday. GbpUsd ended up 0.48% to 1.7719.

Friday, Investors largely ignored a report showing that US employers cut payrolls at the steepest rate in 5-1/2 years last month, cutting an unexpectedly large 159k nonfarm jobs as employment contracted for a ninth straight month. Analysts said the report and continued steep fall of stocks on Wall Street raised the chances of a Federal Reserve interest rate cut by the end of the year. Stocks on Wall Street ended down as investors worried that the rescue package might not prevent a recession in the United States, causing the dollar to surrender earlier gains versus the yen.

Today's Key Issues (time in GMT):

00:00 AUD Market Holiday
07:00 GBP September Halifax house prices -1.8% vs -1.8% (mom)
07:00 GBP September Halifax house prices -12.5% vs -10.9%
08:30 EUR October Euro-zone Sentix Index -27 vs -20.20
12:30 CAD August Building permits -1.3% vs 1.8%
12:30 CAD September Ivey PMI 52.8 vs 51.5

The Risk Today:

EurUsd Last week sharp weakness below 1.3882 11th September initial support did open the way to next strong support 1.3666 December 2004 high. A break lower will focus on 1.3056 support (retracement of 0.8231 – 1.6039 advance). 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 Friday 25th September 1.8669 high marked the end of the mid-September uptrend. Last week further weakness below 1.8324 (23.6% retracement of 2.1161- 1.7447 decrease) may open the way to 1.7447 11th September low and may test 1.7422 (50% retracement of 1.3682 – 2.1161 advance). Strong support holds 1.7251 3rd April low. On the upside, initial resistance holds 1.8669 Friday high ahead of 1.8795 21st August high strong resistance holds.

UsdJpy Last week, Market return with strong volatility posting 103.50 to 107 trading range. Further advance will put 110.67 15th August high. Or renewed pressure below 103.50 initial support may open the way to 101.45 support (61.8% retracement of 95.75 – 110.67 advance), as 100 pivot point.

UsdChf Market posted 1.1414 high last week, near 1.1418 11th September high. Further advance may open the way to 1.1596 December high. On the downside, only weakness below 1.0692, 22nd September low, would 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. Initial resistance holds 1.1418 11th September trend high. Strong resistance holds 1.1593 December 2007 high.

Resistance and Support:

Published on  Mon, Oct 6 2008, 11:31 GMT