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Mid-Day Report: Dollar Recovers Mildly in Quiet Market

Action Insight | Written by ActionForex.com | Apr 20 07 13:11 GMT |
Forex Mid-Day Technical Report Dollar Recovers Mildly in Quiet Market

Dollar recovers mildly as markets set to end quietly with an empty US economic calendar. Euro continues to lose upside momentum despite hawkish comments from ECB Weber who said that ECB can’t give the ‘all-clear’ signal for monetary policy, suggesting that it’s not finished with tightening yet. Retail sales in UK rose less than expected by 0.3% mom in Mar but the yoy rate was boosted higher to 4.8% by strong revision in Feb’s growth from 4.9% to 5.1%. But Sterling has little reaction to the data as it continues to consolidate.

The bigger mover in early US is the USD/CAD which dips sharply after stronger than expected retail sales from Canada and is pressing this week’s low again. headline retail sales beats expectation by growing 0.1% mom while ex-auto sales impressively growth 1.0% comparing to consensus of 0.2%. EUR/USD

Daily Pivots: (S1) 1.3575; (P) 1.3597; (R1) 1.3633; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

EUR/USD edged higher to 1.363 earlier but upside momentum continues to diminish. As discussed before, bearish divergence condition in 4 hours MACD and RSI suggests a short term top should be around the corner. But a break of 1.3558 support is needed to confirm and bring further pull back to 4 hours 55 EMA (now at 1.3524). But downside should be contained above 1.3406/10 support and bring rally resumption .However, break of 1.3406/10 will suggest that deeper decline is underway and put 1.3252 support into focus. However, further rally could still be seen towards 1.3668 (04 high) as long as 1.3558 support remains intact.

In the bigger picture, outlook remains unchanged. EUR/USD is still trading comfortably within medium term rising channel (1.1639, 1.2483, 1.2978) and medium term up trend from 1.1639 is still in progress. Such up trend is interpreted as having first move completed with three waves up to 1.2978, subsequent sideway consolidation completed at 1.2483. Rise from 1.2483 has made a top at 1.3364 but subsequent correction has completed with three waves down to 1.2865 already. The current rise from 1.2865 should represent resumption of this whole up trend and further rise is still in favor to retest 1.3668 (04 high).

Having said that, on the upside, risk of medium term reversal will increase as EUR/USD approaches 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822 and focus will be then on reversal signals. On the downside, break of the 1.3253 support will suggest that the rise from 1.2865 has completed. More importantly, this will be the first warning that the rise from 1.2483 has ended and thus the whole up trend from 1.1639 too. Focus will then be back to medium term rising channel (now at 1.2954).

GBP/USD

Daily Pivots: (S1) 1.9980; (P) 2.0037; (R1) 2.0089; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

Cable’s consolidation from 2.0132 continues today. As discussed before, with 4 hours MACD staying below signal line, a short term top is likely formed at 2.0132 already. Hence, further retreat is still in favor as long as cable stays below 2.0095 minor resistance. Below 1.9883 again will encourage further fall towards 1.9877 support. Break will put short term rising channel support (now at 1.9764) in focus. On the upside, above 2.0095 minor resistance will indicate correction from 2.0132 has completed and bring retest of this high.

In the bigger picture, rise from 1.8090 is interpreted as having first wave finished at 1.9142, subsequent second wave correction completed at 1.8517. Third wave rally has completed at 1.9913 while the fourth wave correction has already ended with three subwaves down to 1.9183. Current rise from 1.9183 will likely be the final advance of this rise from 1.8090. The channeling property of the terminal points of 1.9142, 1.8517, 1.9913 and 1.9183 is supporting this case.

Having said that, resistance should significantly increase as cable meets 2.0106 (92 high). With bearish divergence condition still being displayed in weekly RSI as well as daily MACD, risk of medium term reversal will significantly increase. Hence, focus will be on reversal signal as cable approaches this zone. Break of 1.9723/26 support will warn that the rise from 1.9183 has completed and put rising channel support (now at 1.9394) back into focus. However, a strong break of mentioned 2.0106 resistance will path the way towards 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677.

USD/CHF

Daily Pivots: (S1) 1.2009; (P) 1.2036; (R1) 1.2071; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

USD/CHF’s rebound from 1.2001 continues and at this point further rise could still be seen towards 4 hours 55 EMA (now at 1.2108) as long as USD/CHF stays above 1.2037 minor support. But still, a s long as upside of the current recovery is limited by 1.2150 resistance, the fall from 1.2282 should still be in progress and another fall is still mildly in favor. On the downside, sustained break of 1.2029 cluster support (78.6% retracement of 1..1878 to 1.2571 at 1.2026) will confirm that whole fall from 1.2571 has resumed for 1.1878 low. However, strong rebound from here and a break of 1.2150 resistance suggest that USD/CHF is still bounded in consolidative trading that started at 1.2029 and would bring rebound towards 1.2282 again.

In the bigger picture, medium term outlook remains bearish with USD/CHF staying below both 55 days EMA and 55 weeks EMA. Daily and weekly MACD are both still staying negative, supporting this view too. The preferred interpretation at this point is that the whole down trend from 1.3283 is still in progress with the first move from 1.3283 finished with three waves down to 1.1919. Subsequent rebound to 1.2768 was the interim correction and price actions from there represent resumption of such down trend. Further decline should be seen to 1.1878 low and sustained break will add more credence to this view and bring further medium term weakness towards 100% projection of 1.3283 to 1.1919 from 1.2768 at 1.1404.

However, note that USD/CHF is still bounded in wide range of 1.1878 to 1.2768. A rebound to above 1.2354 resistance will dampen this view and indicate that the fall from 1.2571 has completed after meeting 1.2027 fibo support. Another rise could then be seen to retest this high and then the upper end of the range at 1.2768.

USD/JPY

Daily Pivots: (S1) 117.81; (P) 118.24; (R1) 118.88; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

USD/JPY’s rebound from 117.60 stalls after meeting 118.75 resistance. As discussed before, since an intraday low is formed at 117.60 already, bias is turned back to the upside and further rise cannot be ruled out. However, we’d maintain than bearish divergence condition in 4 hours MACD and RSI indicates a short term top is already formed at 119.86 after recent rally was limited by falling trend line (122.05, 121.61) and failed to take out 119.48 fibo resistance (61.8% retracement of 122.17 to 115.13) decisively.

Having said that, it will still take a break above 119.86 high to revive short term bullishness. Otherwise, risk remains on the downside for another fall. Below 118.24 minor support will suggest the recovery from 117.60 has completed and encourage further fall to 117.20 support and then 116.38.

In the bigger picture, break of 116.38 support will revive the original case that the whole up trend from 108.99 has completed at 122.17. In this case, the corrective nature of the rise from 108.99 swings favors back to the case that such medium term rally is merely part of a large scale consolidation that started at 121.38, with first leg completed at 108.99 and second leg completed at 122.17. The fall from 121.17 should then the third leg of such consolidation and deeper decline should at least be seen to below 114.02/41 support zone (61.8% retracement of 108.99 to 122.17 at 114.02) first with much possibility of further fall to retest 108.99 low.

On the upside, sustained trading above 119.48 fibo resistance (61.8% retracement of 122.17 to 115.13) will dampen our original view and indicate that a stronger rebound is underway. Also, price actions from 122.17 is probably developing into sideway consolidation to rise from 108.99 only, instead of as the third leg of consolidation that started at 121.38. In such case, a rest of 122.17 high could then be seen. But still, firm break above this resistance is needed to confirm medium term rally from 108.99 has resumed. Otherwise, medium term outlook will be neutral at best.

EUR/JPY

Daily Pivots: (S1) 160.08; (P) 160.78; (R1) 161.97; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

Similar to USD/JPY, EUR/JPY’s rebound from 159.60 stalls after rising to 161.95. At this point, further rebound is still in favor as long as EUR/JPY stays above 160.88 minor support. But still, firm break above 162.42 and both short term and medium term channel resistance is needed to confirm recent rally has resumed. Otherwise risk for another fall remains. Below 160.88 minor support will put short term rising channel support back into focus (now at 159.48) back into focus. Break will encourage deeper decline to 158.01 cluster support (38.2% retracement of 150.75 to 162.42 at 157.96) first.

In the bigger picture, we’re treating the whole year long rise from 130.60 as resumption of the long term up trend with first wave ended at 143.60, subsequent correction ended at 137.167. The third wave up could have ended at 159.63 with a diagonal triangle already. Fourth wave correction has ended at 150.75 and rise from there represents the final advance in this structure. The channeling property of 143.60, 137.16, 159.63 and 150.75 is supporting this case.

Having said that, risk of a medium term reversal is also increasing with EUR/JPY now pressing the medium term channel resistance. Break of the short term channel support indicate that rise from 150.75 has completed and give a serious warning signal that the whole rise rise from 130.60 has ended. Focus will then turn to medium term channel support (now at 152.37). However, sustained break of the mentioned channel resistance will suggest that the underlying outlook is more bullish than we thought and will path the way towards 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64.

Forex News Digest

http://www.bloomberg.com/apps/news?pid=20601083&sid=atlTPpREh8ZY&refer=currency

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http://c.moreover.com/click/here.pl?r896261876
Fri, 20 Apr 2007 08:51:00 GMT from The Australian

http://c.moreover.com/click/here.pl?r896258407
Fri, 20 Apr 2007 08:48:00 GMT from AP via MSN Money

http://c.moreover.com/click/here.pl?r896226824
Fri, 20 Apr 2007 08:22:00 GMT from AP via MSN Money

http://c.moreover.com/click/here.pl?r896225316
Fri, 20 Apr 2007 08:21:00 GMT from Reuters

http://c.moreover.com/click/here.pl?r896181499
Fri, 20 Apr 2007 07:44:00 GMT from CNN Money

http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:50 JPY Japan All industry index Feb 0.90% -0.30% 0.70%
01:30 AUD Import Price Index Q/Q Q1 -1.70% -1.00% -3.20%
01:30 AUD Export Price Index Q/Q Q1 0.00% -0.30% 0.20%
07:15 CHF Swiss Combined PPI M/M Mar 0.30% 0.30% 0.30%
07:15 CHF Swiss Combined PPI Y/Y Mar 2.40% 2.30% 2.20%
08:30 GBP U.K. Retail sales M/M Mar 0.30% 0.50% 1.40% 1.60%
08:30 GBP U.K. Retail sales Y/Y Mar 4.80% 4.70% 4.90% 5.10%
12:30 CAD Canada Retail sales M/M Feb 0.10% -0.10% -0.20% -0.40%
12:30 CAD ex. auto M/M Feb 1.00% 0.20% 0.30%

http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/

China yuan ends at 7.7445 to US dollar vs 7.7400 in OTC trade

BEIJING (XFN-ASIA) - The yuan finished at 7.7445 to the dollar on the over-the-counter (OTC) market, compared with yesterday’s close of 7.7400.

On the exchange-traded market, the yuan finished at 7.7445 from 7.7390 yesterday, a Guangzhou-based trader with a foreign bank said.

The yuan traded between 7.7473-7.7401 in the OTC market and 7.7450-7.7421 in the exchange-traded market.

The central bank set the yuan central parity at 7.7436 to the dollar today, compared to yesterday’s record high of 7.7386.

The People’s Bank of China currently allows a trading band of 0.3 pct on either side of the midpoint.

jianbo.wu@xfn.com

For more information and to contact AFX: www.afxnews.com and www.afxpress.com

Iranian police warn barbers against western-style haircuts

IRANIAN police have warned barbers against offering western-style haircuts or plucking the eyebrows of male customers, an Iranian newspaper has reported.

The report, confirmed by an Iranian news agency, appeared to be another sign of a crackdown on clothing and other fashion deemed to be against Islamic values.

“Western hairstyles… have been banned,” the newspaper Etemad said.

The move came a week after police launched a crackdown against the growing numbers of young women testing the limits of the law with shorter, brighter and skimpier clothing ahead of the summer months.

Under Iran’s Islamic Sharia law, women must cover their hair and wear long, loose- fitting clothes to disguise their figures. Violators can receive lashes, fines and prison.

In a statement, police said: “Barber shops have been warned to avoid using Western hairstyles and doing men’s eyebrows.”

In recent years, young men in Iran have started paying more attention to the way they look and dress. Spiked up hair is known as the khorusi (rooster) style and some men also use make-up.

Several men’s hairdressers in Tehran offer cuts in the style of Hollywood stars and western celebrities. Clients can also have their eyebrows plucked.

Mohammad Eftekharifard, the head of the barbers’ union, said police had instructed the union to “exercise specific regulations in barber shops that work under its supervision”.

Barbers who do not adhere to the rules may be closed for a month and lose operating permits, Etemad quoted him as saying.

Related topic

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http://news.scotsman.com/topics.cfm?tid=386

Football: San Siro shut to fans as new Italian guidelines kick in

The Italian interior ministry has confirmed that only six stadiums in the country meet security requirements, meaning all league matches in other grounds will be played behind closed doors.

Rome’s Olympic Stadium made the list, but the San Siro in Milan did not. Stadiums in Genoa, Siena, Cagliari, Turin and Palermo were all deemed safe on the list, drawn up after a meeting of security and sports officials today.

“My hope is that in a reasonable amount of time we will able to say we are not only world champions but we have deeply, profoundly changed the system of the football scene in this country,” said the sports minister, Giovanna Melandri. “Many things have happened already, many internal regulations and rules have changed - sports justice, the code for judges and agents, plus we are in the midst of changing regulations for TV rights. Now we are facing the challenge of violence,” she said in an interview.

“At the end of this process, we will be able to say we have also won this match and given our country a more credible, transparent football that has driven violence away.”

Five of this Sunday’s Serie A matches will be played in front of empty grounds, according to today’s findings, with another five open to the public. Officials said, however, that further checks on the stadiums would be carried out in the coming days, while they also banned all night matches in the Serie A and in the lower divisions.

Melandri added that the decision to close stadiums to fans was “drastic and unprecedented in this country”, but added that most venues are likely to reopen shortly. “Many stadiums need weeks not even months of works,” she said. “After the first wave of emotional reactions, we’ll see. I think eradicating violence from stadiums is in everybody’s interest, even for clubs. It’s a temporary solution to cope with a situation that is not normal. But it was not normal and we could not accept any longer that the minimum safety standards could not be guaranteed.”

Milan vice-president Adriano Galliani was quick to criticise the decision, adding that he was not sure about whether the stadium could be used for the March 7 return leg with Celtic in the last 16 of the Champions League. “We have done everything we could do. It’s obvious we want to play at the San Siro with open doors and as far as the Champions League is concerned, yesterday I spoke to [Uefa president Michel] Platini and we are free to play at home, maybe behind closed doors, or away [from home]. We have done everything the law has asked us to do and have no reason to feel bad.

“Geneva and Newcastle have offered to let us play there. I think it’s fundamentally unjust to close a stadium like the San Siro on which we have already spent 20m (13.3m) for works which are neverending.”

Meanwhile, Italian police have confirmed they are questioning a 17-year-old teenager from Catania over the murder of policeman Filippo Raciti in riots outside Catania’s ground before and after their derby with Palermo last Friday.

The policeman died after being struck with a blunt object and having a homemade explosive thrown into his car. Raciti’s death prompted the initial suspension of all matches in the country.

Bank of Italy 24-mth zero coupon Treasury certs 70.7 pct oversuscribed; yield up

MILAN (Thomson Financial) - The Bank of Italy said its auction of 24-month zero coupon Treasury (CTX) certificates was 70.7 pct oversubscribed, while the yield rose from the previous auction.

The price established was of 93.551 for a gross annual yield of 4.063 pct, up from 3.935 pct previously.

The bank received 3.414 bln eur worth of bids for 2.000 bln on offer and assigned.

The exclusion price was of 91.601.

yael.schrage@thomson.com

ysc/am

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