European, Britain, Australian and NZD Central Banks rate announcements this week

The Dollar rose to a seven-week high against the Euro on Friday, as strong US jobs and manufacturing lowered expectations of a Federal Reserve interest rate cut this year. This week’s US economic data, led by the April International Trade Balance report and ISM’s US services survey, are expected to offer little market influence.
The market focus will now shift to a series of Central Bank policy meetings this week. The European Central Bank is widely expected to lift interest rates to 4% from the current 3.75% on Wednesday. Central Banks in Britain, Australia and New Zealand will also make rate announcements later this week, with the market expecting all of them to hold interest rates unchanged this time.

News and Events:
The Dollar rose to a seven-week high against the Euro on Friday, as strong US jobs and manufacturing lowered expectations of a Federal Reserve interest rate cut this year. US jobs data showed gains of 157k non-farm jobs in May offsetting a fairly tepid US core inflation number for April. Those Friday’s data followed a weaker-than-expected revision to 1Q US Gross Domestic Product on Thursday. The US economy grew at 0.6% rate n the first three months of the Year, the slowest pace in more than four years.
This week’s US economic data, led by the April International Trade Balance report and ISM’s US services survey, are expected to offer little market influence, trader say, as they expect currencies to trade within narrow ranges.
The market focus will now shift to a series of Central Bank policy meetings this week. The European Central Bank is widely expected to lift interest rates to 4% from the current 3.75% on Wednesday. Traders said the market has anticipated the rate rise and investors would look to comments from ECB President Jean-Claude Trichet for clues about the future path of monetary policy. Also, Central Banks in Britain, Australia and New Zealand will make rate announcements later this week, with the market expecting all of them to hold interest rates unchanged this time. At the same time, the market sees the Bank of England raising interest rates to 5.75% in summer from the current 5.5%, and possibly another rate increase after that.

Today’s Key Issues (time in GMT):

09.00 EUR April Euro-zone Producer Price Index 0.3% vs 0.3% (MoM)
09.00 EUR April Euro-zone Producer Price Index 2.3% vs 2.7% (YoY)
09.00 EUR ECB’s Trichet speaks in Brussels

14.00 US April Factory Orders 0.4% vs 0.2% (MoM)
14.00 US April Factory Orders 0.6% vs 3.5% (YoY)

15:00 EUR Euro-zone Finance Ministers Meeting

23.01 GB May BRC Retail Sales Monitor, same store sales, 2.9% vs 2.4% (YoY)

23.50 JPY 1Q MOF’s Capital Expenditures survey 10.5% vs 16.8% (YoY)

The Risk Today:

EurUsd market continues to favor further downside in EURUSD. A break of last Friday’s 1.3393 new trend low would open the door for a run at 1.3370 (38.2% retracement of 1.2865-1.3683). Minor initial resistance is around 1.3477, last Thursday’s high.

GbpUsd remains below resistance at 1.9900, last Tuesday high. Only a move above this level would jeopardize the actual pressure for a run below the 1.9734, last Wednesday low, which would open the door toward the 1.9677 trend low and resume bear trend towards 1.9659 (50% retracement of the 1.9184 to 2.0134 advance).

UsdJpy bull trend remains intact with the focus on the January-February 122.10 to 122.22 highs. Not far off is 122.38 (61.8% of 135.18-101.65 big 5 years decline). Last Friday 122.14 high would mark minor resistance. Support lies at 120.86, May 25th low.

UsdChf recent corrective pullback bottomed last Tuesday at 1.2200, with the recovery from there likely to push to a new trend high above 1.2332 and test resistance at 1.2356 (61.8% retracement of the 1.2575-1.1994 decline). Minor support is in the 1.2249 Friday’s low.

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Resistance and Support:

By Jean-Claude Braha - ACM Advanced Currency Markets, Geneva, Switzerland