After stock markets around the world suffered their worst ever weekly losses last week, leaders from Group of Seven rich nations set out a plan of action to stem the crisis and European leaders agreed to inject public funds into the banking system if necessary. Finance ministers and central bankers from the United States, Canada, Japan, Britain, Germany, France and Italy issued a one-page communiqu� at the end of their discussions on Friday describing only their decisions on joint action to overcome the financial market crisis. The flurry of initiatives to stem the worst financial crisis since the 1930s increased investor appetite for risk, though analysts were uncertain whether the improving mood would last very long. But trading activity was subdued due to a national holiday in Japan, Canada and with US bond markets closed for the Columbus Day holiday.
News and Events:
After stock markets around the world suffered their worst ever weekly losses last week, leaders from Group of Seven rich nations set out a plan of action to stem the crisis and European leaders agreed to inject public funds into the banking system if necessary.
Finance ministers and central bankers from the United States, Canada, Japan, Britain, Germany, France and Italy issued a one-page communiqu� at the end of their discussions on Friday describing only their decisions on joint action to overcome the financial market crisis. But at a news conference after the G7 talks, ECB President Jean-Claude Trichet also read out a statement on foreign exchange rates, saying it was agreed on by the G7.
Early this Monday, the Yen slid against higher-yielding currencies while the AUD surged as leaders from Europe to the United States rushed out plans to shore up banks and stem the panic gripping investors. The flurry of initiatives to stem the worst financial crisis since the 1930s increased investor appetite for risk, though analysts were uncertain whether the improving mood would last very long. But trading activity was subdued due to a national holiday in Japan, Canada and with US bond markets closed for the Columbus Day holiday.
Last week, EurUsd lost 2.8% at 1.3410 having dropped as low as 1.3259 on Friday. UsdJpy dropped 4.43% to 100.67 after posting 97.91 low on Friday. UsdChf rose 0.88% to 1.1386 recovering from 1.1129 Friday low. GbpUsd was 3.82% lower at 1.7043 having trade as low as 1.6786 last Friday. Among the largest moved; AudUsd dropped 16.91% last week to 0.6434 hitting the lowest 0.6330 and AudJpy lower by 20.6% at 64.76 having posted 63.30 low also on Friday. NzdUsd and NzdJpy were also sharply down, respectively -10.16% to 0.5943 and -14.24% to 59.79.
Today’s Key Issues (time in GMT):
00:00 USD Columbus Day � Bond Market Holiday
00:00 CAD Market Holiday
00:00 JPY Market Holiday
07:15 CHF September Producer/Import Price -0.3% vs -0.5% (mom)
07:15 CHF September Producer/Import Price 3.9% vs 4% (yoy)
08:30 GBP September PPI Core Output 0.1% vs -0.1% (mom)
08:30 GBP September PPI Core Output 6% vs 6.3% (yoy)
08:30 GBP September PPI Input prices -1.5% vs -2% (mom)
08:30 GBP September PPI Input prices 19.8% vs 26.2% (yoy)
08:30 GBP September PPI Output prices -0.4% vs -0.6% (mom)
08:30 GBP September PPI Input prices 8.8% vs 9.7% (yoy)
23:50 JPY Corp goods price -0.5% vs -0.1% (mom)
23:50 JPY Corp goods price 6.6% vs 7.2% (yoy)
The Risk Today:
EurUsd: Last week strong pressure hit strong support 1.3666 December 2004 high and broke below 1.3500. Market strongly rebounded this morning over 1.3600. Initial resistance holds 1.3666 former support. 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. On the downside, renewed weakness will focus on 1.3056 support (retracement of 0.8231 � 1.6039 advance). Initial support holds 1.3259 Friday low.
GbpUsd: Last week market dropped as low as 1.6786, now initial support. Further downtrend may look for 1.6568 November 2003 low and 61.8% retracement of 1.3682�2.1161 advances). Next supports are 1.4560 trendline and 1.3682 March 2001 low. On the upside, initial resistance holds 1.7422 former support. Strong support holds 1.7697 last week high ahead of 1.8304 former support.
UsdJpy: Downtrend is set since beginning of September and hit 97.91 low Friday. Further pressure may open the way to 95.75 17th March low. Current weak trend will stand below 100 pivot point. On the further upside, recovery over 105 pivot point will put focus again on 108 and 110.67 15th August high. Initial resistance holds 101.45 former support.
UsdChf: Market posted 1.1489 high last Monday. Further advance may open the way to 1.1596 December high and strong resistance. Initial support holds 1.1129 Friday low. On the downside, only weakness below 1.0692, 22nd September low, would give direction and open the way down to 1.0500 and 1.0375. Such a move may look for 1.0013 15th July low in front of 0.9637 17th March low.
Resistance and Support:
By Jean-Claude Braha - ACM Advanced Currency Markets, Geneva, Switzerland