The Dollar rose against a basket of currencies on Monday after a surprise jump in US existing home sales gave optimism over the economic outlook. Stock exchange has been boosted by risk appetite as JPMorgan proposed a fivefold increase offer for Bear Stearns. JP Morgan had upped its offer for Bear Stearns to $10 per share from $2 previously. This boosted US equities and investors’ appetite for riskier trades. The New York Federal Reserve said it would provide $29 billion in term financing to facilitate JP Morgan’s acquisition of Bear Stearns and will form a privately managed company to oversee assets pledged as collateral.
News and Events:
The Dollar rose against a basket of currencies on Monday after a surprise jump in US existing home sales gave optimism over the economic outlook. Stock exchange has been boosted by risk appetite as JPMorgan proposed a fivefold increase offer for Bear Stearns. Sales of existing US home sales rose in February for the first time since July, data showed. Yesterday, UsdJpy raced to a session peak of 100.90, well off a nearly 13-year low of 95.74 from 17th March. It last traded at 100.75, up 1.17%. EurJpy surged 1.21% to 155.53. Dollar’s rise against the Japanese currency was largely driven by news that JP Morgan had upped its offer for Bear Stearns to $10 per share from $2 previously. This boosted US equities and investors’ appetite for riskier trades. At the same time, the New York Federal Reserve said it would provide $29 billion in term financing to facilitate JP Morgan’s acquisition of Bear Stearns and will form a privately managed company to oversee assets pledged as collateral. But traders said there were still concerns that the deal might not close and introduce some level of uncertainty yet again in the market. Those worries helped the Euro recoup some losses against the Dollar. EurUsd was flat at 1.5437 after slipping to a session trough of 1.5341 and still off a record high of 1.5904 touched last week. Traders said there was also interest to buy the European single currency below 1.5400, limiting its losses. It was an illiquid market as most financial markets were shut for the Easter holidays on Monday and will reopen on Tuesday. UsdChf jumped 0.91% to 1.0187, retracing from intraday 1.0250 high.
Today’s Key Issues (time in GMT):
12:30 CAD January Retail Sales 1.2% vs 0.6% (MoM)
12:30 CAD January Retail Sales ex-auto 18% vs -0.4% (MoM)
14:00 USD March Consumer Confidence 73.5 vs 75
21:00 USD ABC/Wash Post index -33 vs -31
23:50 JPY February Exports 7.5% vs 7.7%
23:50 JPY February Imports 5.9% vs 9%
23:50 JPY February Trade Balance 1146.4B vs -79.3B
The Risk Today:
EurUsd Euro posted a new all-time high 1.5904 last week, confirming medium term trading range 1.5400 � 1.6000. Initial support hold 1.5528 (23.6% retracement of 1.4311-1.5904 advance). Psychological 1.5000 level marks strong key support before 1.4500 pivot point. Initial resistance hold 1.6000 key level.
GbpUsd Cable advanced as high as 2.0398 two weeks ago, 2 � month high. It reversed last week below 2.0000 further to profit taking. Actual trading range is 1.9700 � 2.0400. Psychological 2.0100 and 2.0000 supports have been broke last week. Renewed pressure may open the way down to 1.9337 January low and 1.9105 (50% retracement of 1.7049 � 2.1162 advance).
UsdJpy It rebounded from 95.74 last week low. Last week marks the end of a 4-week downtrend. 100 Pivot marks resistance. Bottom support holds 95. On the Upside, only a confirmation over 100 may open the way up to 110.10 strong (Trendline) resistance and mid January double top ahead of 111.92 early January high. Strong support holds 95.74 last week low.
UsdChf Market remains weak below 1.0200, having traded below 1.0000 psychological level last week. Strong support holds 0.9639 last Monday low. Uptrend would only return over 1.0200 resistances. Early January double top 1.1191 marks strong resistance.
Resistance and Support:
By Jean-Claude Braha - ACM Advanced Currency Markets, Geneva, Switzerland