As manufacturing slowed to its lowest level since August 2003, the dollar slumped across all pairs on expectation that the Federal Reserve Bank will have no choice but to cut rates in early 2008.
News and Events:
As manufacturing slowed to its lowest level since August 2003, the dollar slumped across all pairs on expectation that the Federal Reserve Bank will have no choice but to cut rates in early 2008. The United States ISM manufacturing index fell to 47.7 in December from 50.8 previous, fueling the reasoning that the economy is still threatened by the subprime effects. Inflation concerns still remain in focus as the ISM price index rose to 68 from 67.5 previous. Interest rate futures show that traders have fully priced-in a 25bp cut to 4.00% for the January 30 policy meeting.
Today�s most interesting chart is the GBPJPY. Since the credit market turmoil in August, the pair has triple bottomed at 221.00 and finally fell below yesterday, and hitting 215 today. This is very bearish.
Today’s Key Issues (time in GMT):
12:00 USD MBA Mortgage Applications (DEC 28)
12:30 USD Challenger Job Cuts (YoY) (DEC)
13:15 USD ADP Employment Change (DEC) 33k vs 189K
13:30 USD Continuing Claims (DEC 22) 2675K vs 2713K
13:30 USD Initial Jobless Claims (DEC 29) 345K vs 349k
The Risk Today:
EurUsd eyeing 1.4900 and 1.5000 as next targets, the pair is clearly still trending up. Only a break down through 1.4300 could change that.
GbpUsd will find very strong support towards 1.9600. This level will determine the near future of the pair. On the upside, the pair is bullish above 2.0100.
UsdJpy heading towards our target of 107.25, the low of November 26, 2007. Hitting the trend line at 114.50, the pair let go into a free fall since.
UsdChf has hit support at 1.1160. The pair can either move down to a downward target of 1.0950 or bounce off and meet 1.1600 on the upside.
Resistance and Support:
By James Brandt - ACM Advanced Currency Markets, Geneva, Switzerland