<TABLE class=tborder cellSpacing=1 cellPadding=6 width=“100%” align=center border=0><TBODY><TR><TD class=alt1>Dollar was mixed after soft US existing home sales
The Dollar edged lower against the Euro on Friday after a surprisingly weak report on existing home sales. April’s US existing home sales are the almost mirror image of the new home sales figures released on Thursday. Whereas new home sales rallied on the back of lower prices, existing home sales fell to a 4-year low of 5.99m annualized. This suggested that a downturn in the US housing sector may have further room to run.
The Yen had fallen early on Friday as investors return into carry-trades. Political concerns also took their toll on the Yen after a report from Japan’s Kyodo news agency saying North Korea had fired several short-range missiles into the Sea of Japan.
UsdCad dropped to a fresh 29 � year low at 1.0804 after breaking as low as 1.0777, due to higher oil prices and expectations for a hawkish statement from the Bank of Canada this week.
News and Events:
The Dollar edged lower against the Euro on Friday after a surprisingly weak report on existing home sales which renewed worries that a downturn in the US housing sector may have further room to run. April’s US existing home sales are the almost mirror image of the new home sales figures released on Thursday. Whereas new home sales rallied on the back of lower prices, existing home sales fell to a 4-year low of 5’990k annualized, from 6’150k, while the median price jumped to $229,000, from $217,000. Prices are now up by 2.9% over the past year. Some analysts said the data could help cut short a rebound in the Dollar.
EurUsd was up 0.13% to 1.3442, just above the six-week low of 1.3412 hit earlier in the session. UsdJpy was up 0.38% to 121.77 after having hit the three-month high of 121.89. Last week was the fifth straight week of declines for the Yen, the longest since a 6-week trend in September-October 2005.
The Yen had fallen early on Friday as investors return into carry-trades. Political concerns also took their toll on the Yen after a report from Japan’s Kyodo news agency saying North Korea had fired several short-range missiles into the Sea of Japan. UsdChf and GbpUsd were nearly flat at respectively 1.2282 and 1.9837.
After the existing home sales data, rate futures were reflecting a 60% chance that the Federal Reserve will lower rates by 0.25% by the end of 2007, above a low of 42% on Thursday.
UsdCad dropped to a fresh 29 � year low at 1.0804 after breaking as low as 1.0777, due to higher oil prices and expectations for a hawkish statement from the Bank of Canada this week.
Trading will be light on this Memorial Day Holiday weekend in the United States.
Today’s Key Issues (time in GMT):
US Market Holiday - Memorial Day
CHF Market Holiday
UK Market Holiday - Whit Monday
Germany Market Holiday
Central Bank Rates
USD 5.25% EUR 3.75% GBP 5.5% JPY 0.5% CAD 4.25% CHF 2.25%
The Risk Today:
EurUsd remains vulnerable keepings its focus on 1.3370 (38.2% retracement of 1.2865-1.3683). Nearby is the 1.3370, the breakout high from early December. Initial resistance is at last Wednesday’s 1.3503 high, but only a move above 1.3545 resistance would halt downward pressures and revive the bull trend with focus on the 1.3623 resistance.
GbpUsd reversed higher from last week’s 1.9677 trend low. Sustained gains above previous week’s 1.9875 high would mark a turn in the short-term bear trend from the mid-April 2.0133 high and may open the way for further gains towards 2.0000 early May high. Renewed losses below 1.9716, Wednesday low, would however resume bear trend towards 1.9659 (50% retracement of the 1.9184 to 2.0134 advance). Minor support for now is at last Tuesday’s 1.9770 breakout high.
UsdJpy cleared 121.64 resistance, shifting focus to the January-February 122.10 to 122.20 double top. Last Wednesday 121.89 high would mark minor resistance before 122.05 (February high) next resistance. Initial support still holds 120.54 level.
UsdChf maintains a bullish tone following the recent break of 1.2285 last Monday. This paves the way for gains towards the 1.2356 resistance (61.8% retracement of the 1.2575-1.1994 decline). Minor support is in the 1.2241 Wednesday’s low.
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Resistance and Support:
By Jean-Claude Braha - ACM Advanced Currency Markets, Geneva, Switzerland
Analysis by ACM Forex
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