The Dollar dropped against Yen on Thursday, pushed by Wall Street’s plunge as fears of a worldwide downturn that was much deeper than initially thought made investors shift in the safer assets. Meanwhile, Dollar and Yen rose against the Euro and other high yielding currencies as investors sold risky assets such as stocks and commodities financed by loans denominated in the Dollar and the Japanese unit. Currency investors continued to track movements in the US stock market, with the S&P500 to an 11-1/2 year low, down 6.71% yesterday at 752.44, as optimism about a deal for the ailing auto sector faded. US Senate Democratic leader Harry Reid said there has been no viable auto industry plan “that can be passed by the House and Senate, and signed by the President.” The Dollar was also weighed down by data showing the number of Americans filing for jobless benefits spiked to a 16-year high of 542k last week. A report indicating that US mid-Atlantic factory activity sank to an 18-year low further added to the gloom.
News and Events:
The Dollar dropped against Yen on Thursday, pushed by Wall Street’s plunge as fears of a worldwide downturn that was much deeper than initially thought made investors shift in the safer assets. Meanwhile, Dollar and Yen rose against the Euro and other high yielding currencies as investors sold risky assets such as stocks and commodities financed by loans denominated in the Dollar and the Japanese unit.
Currency investors continued to track movements in the US stock market, with the S&P500 to an 11-1/2 year low, down 6.71% yesterday at 752.44, as optimism about a deal for the ailing auto sector faded. US Senate Democratic leader Harry Reid said there has been no viable auto industry plan “that can be passed by the House and Senate, and signed by the President.”
UsdJpy fell as low as 93.56, three-week low, and last traded down 2.05% at 94.06. EurJpy fell 2.55% to 117, having also posted a three-week low at 116.42. EurUsd slipped 0.51% to 1.2439 while GbpUsd fell 1.57% to 1.4738. UsdChf rose 1.15% to 1.2257 having posted 1.2282 high after the Swiss National Bank cut interest rates by 100bp, citing worsening economic conditions. NzdUsd fell 3.79% to a nearly six-year low of 0.5191 while AudUsd plunged 4.48% to 0.6096.
The Dollar was also weighed down by data showing the number of Americans filing for jobless benefits spiked to a 16-year high of 542k last week. A report indicating that US mid-Atlantic factory activity sank to an 18-year low further added to the gloom.
Analysts said investors remained nervous about the automakers, which are seeking $25 billion in emergency loans from Congress, and the viability of banking giant Citigroup, whose shares fell below $5 to their lowest in nearly 14 years.
Today’s Key Issues (time in GMT):
03:34 JPY BoJ rate decision 0.3% vs 0.3%
07:45 EUR October French Consumer spending -0.4% vs 0.6% (mom)
08:00 EUR November French Markit Manufacturing PMI 37.9 vs 40.6
08:00 EUR ECB�s Ewald Nowotny speaks at Briefing
08:00 EUR November French Markit Services PMI 46.6 vs 47.5
08:30 EUR November German Markit Services PMI 47.5 vs 48.3
08:30 EUR November German Markit Manufacturing PMI 42 vs 42.9
09:00 EUR November Euro zone Markit composite PMI 42.8 vs 43.6
09:00 EUR November Euro zone Markit Manufacturing PMI 40.5 vs 41.1
09:00 EUR November Euro zone Markit Services PMI 45 vs 45.8
11:30 EUR ECB�s Gonzalez-Paramo speaks on economic uncertainty
12:00 CAD October CPI BoC Core 0.0% vs 0.4% (mom)
12:00 CAD October CPI BoC Core 1.9% vs 1.7% (yoy)
12:00 CAD October CPI Inflation -0.6% vs 0.1% (mom)
12:00 CAD October CPI Inflation 3.1% vs 3.4% (yoy)
13:00 EUR ECB�s Trichet panel discussion on Bretton Woods II
The Risk Today:
EurUsd: Market dropped as low as 1.2330 on October 28th and sharply rebounded to 1.3298 high Thursday last week. This shows actual trading range 1.2330 � 1.3298 drawing a triangle consolidation pattern. On the downside, renewed weakness will open the way down to trendline support 1.2208. Next long-term support holds 1.1640 November 2005 low. Further support holds 1.0739 September 2003 low. On the upside, only a return over 1.4000 (former trendline support) and 1.5000 will release actual pressure and may put key resistance 1.6000 into focus. Resistance holds 1.4002 former trendline support. Initial resistance holds 1.3298 end October high ahead of strong resistance 1.2814 Wednesday high.
GbpUsd: Market dropped as low as 1.4558 last week in current 3-month downtrend dropping from late October 1.6673 high. Strong supports hold 1.4560 trendline and 1.3682 March 2001 low. On the upside, strong resistance holds 1.6673 30th October high ahead of 1.7080 (38.2% retracement of 2.1161 � 1.4558). Further resistance holds 1.7860 (50% retracement). Wednesday volatile market hit 1.5250 high before reversing to 1.4973.
UsdJpy: Market has been holding slightly below 99.80 September-October trendline resistance in the latest weeks and drop to 93.56 yesterday. Initial resistance holds 97.55 Monday high. On the upside, only a recovery over 103 upper trendline and 105 pivot point will put focus again on 108 and 110.67 15th August high. Meanwhile, strong resistance holds 100 pivot point. Further pressure in the current downtrend might open the way down to 94.80 13th November low and then 79.70 April 1995 low. Strong support holds 90.91 24th October low.
UsdChf: Market hit 1.2298 high this morning. Further strength may chase for 1.2463 strong resistance ahead of 1.2506 (61.8% retracement of 1.4278 � 0.9639 decline). On the downside, renewed weakness below 1.1605 initial support and 1.1203 30th October low would undermine the current uptrend and reverse through 1.0692 22nd September low and 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