US lawmakers geared up for a possible vote on Monday on creating the $700bio government fund. Congressional leaders from both parties said they had a tentative agreement early on Sunday, but questions abound as to whether the US financial rescue plan, which would use taxpayer funds to buy up toxic mortgage debt, would restore confidence to shaky markets and head of a deeper downturn. The Euro fell against the Dollar as Belgian-Dutch financial group Fortis was rescued in a state buyout after European Central Bank President Jean-Claude Trichet held emergency talks with Dutch, Belgian and Luxembourg officials. Sterling was hit as authorities prepared to nationalize troubled mortgage lender Bradford & Bingley and were discussing a sale of its savings deposits and branches, people familiar with the matter said. Wachovia Corp is in talks with rivals to be taken over, sources familiar with the situation said, after the US bank’s shares tumbled 27% on Friday due to fears about its hefty mortgage portfolio.
[B]News and Events:
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The Euro and Sterling retreated early Monday on growing concerns about the financial system while the Dollar received a boost on relief US lawmakers were set to vote on a $700bio bailout fund to alleviate the credit crisis.
The Euro fell against the Dollar as Belgian-Dutch financial group Fortis was rescued in a state buyout after European Central Bank President Jean-Claude Trichet held emergency talks with Dutch, Belgian and Luxembourg officials. Sterling was hit as authorities prepared to nationalize troubled mortgage lender Bradford & Bingley and were discussing a sale of its savings deposits and branches, people familiar with the matter said. Analyst said the two cases show that the financial crisis is not confined to the United States but is spreading globally. As the US moves ahead with the bailout plan, market focus is shifting to Europe and other regions, weighing on these currencies.
Early Monday, EurUsd fell as low as 1.4483 while GbpUsd shed to 1.8259 low. UsdJpy rose as high as 106.09 and UsdChf posted 1.0988 high. Last week EurUsd was up 0.99% at 1.4609, GbpUsd up 0.62% to 1.8429. UsdJpy dropped 1.34% to 106.01 last week while UsdChf lost 1.33% to 1.0905.
US lawmakers geared up for a possible vote on Monday on creating the $700bio government fund. Congressional leaders from both parties said they had a tentative agreement early on Sunday, but questions abound as to whether the US financial rescue plan, which would use taxpayer funds to buy up toxic mortgage debt, would restore confidence to shaky markets and head of a deeper downturn.
Wachovia Corp is in talks with rivals to be taken over, sources familiar with the situation said, after the US bank’s shares tumbled 27% on Friday due to fears about its hefty mortgage portfolio. Market players were also wary of economic data including monthly US payrolls due on Friday, with weak figures likely to put a cap on the Dollar.
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Today’s Key Issues (time in GMT):[/B]
00:00 USD Vote on the $700bio Rescue Plan
07:00 EUR August Spain Retail Sales -7.1% vs -6% (yoy)
08:30 GBP August BoE consumer Credit �1.05b vs �1.09b
08:30 GBP August Mortgage Approvals 30k vs 33k
08:30 GBP August Mortgage Lending �2.8b vs �3.23b
09:00 EUR September Euro-zone Business climate -0.5 vs -0.33
09:00 EUR September Euro-zone Consumer sentiment -19 vs -19
09:00 EUR September Euro-zone Economic sentiment 87.5 vs 88.8
09:00 EUR September Euro-zone Industrial sentiment -12 vs -10
09:00 EUR September Euro-zone Service sentiment 1 vs 3
12:30 USD August Consumption, adjusted 0.2% vs 0.2%
12:30 USD August Core PCE price index 0.2% vs 0.3% (mom)
12:30 USD August Personal income 0.2% vs -0.7%
23:01 GBP September GfK consumer confidence -39 vs -36
23:30 JPY August All households spending -1.3% vs -0.5%
23:30 JPY August Jobs/application ratio 0.88 vs 0.89
23:30 JPY August Unemployment rate 4.1% vs 4%
[B]The Risk Today: [/B]
[B]EurUsd:[/B] On the current upside, only a return over 1.5000 and 1.5500 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. But renewed weakness below 1.4250 will put the focus on strong support 1.3666 December 2004 high and 1.3056 support (retracement of 0.8231 � 1.6039 advance).
[B]GbpUsd:[/B] On the upside, strong resistance holds 1.8795 21st August high. Former support 1.9363 holds also strong resistance. Key level holds 2.0100 resistance. Renewed weakness below 1.7447 may find support on 1.7422 (50% retracement of 1.3682 � 2.1161 advance). Strong support holds 1.7251 3rd April low.
[B]UsdJpy:[/B] Last two-week strong volatility posted 104.20 to 106.20 consolidation range before recovery over 108 and initial resistance. Further advance will put 110.67 15th August high. Renewed pressure below 105.88 initial support may open the way toward 105 pivot (38.2% retracement of 95.75 � 110.67 advance), as well as 103.54 latest weeks low and 100 pivot point.
[B]UsdChf:[/B] Market rose as high as 1.1418 three-weeks ago and strongly reversed 2-month uptrend last week. High volatile Friday session posted 1.1280 high initial resistance and 1.1007 low. On the downside, only weakness below 1.0734 former resistance would undermine the current trend and open the way down to 1.0500 and 1.0375. This move could also test the 1.0013 15th July low in front of 0.9637 17th March low. Initial resistance holds 1.1280 Friday high ahead of 1.1418 11th September trend high. Strong resistance holds 1.1593 December 2007 high.
[B]Resistance and Support:
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By[B] Jean-Claude Braha [/B]- ACM Advanced Currency Markets, Geneva, Switzerland