ISM figures boost US dollar to two-month high against the Yen. US manufacturing grew at its fastest pace in almost 12 months, posting an ISM index figure of 54.7 versus 51.0 expected and 50.9 previous. The EURJPY dropped to 162.50 in early trading this morning, but found strong support to trade it back to 163.00.
News and Events:
US manufacturing grew at its fastest pace in almost 12 months, posting an ISM index figure of 54.7 versus 51.0 expected and 50.9 previous. There is no doubt investors began taking profits and covering their short dollar positions, however the market still shows a long euro bias with little flows coming out of the Euro heading towards the US dollar. The recent Euro retracement from its high provides decent buying opportunities for euro bulls as the currency remains in its upward channel. The market still believes that the ECB may hike rates next month and possibly once more later in the year as both spending and employment reports from the euro-zone remain strong. The dollar against the yen hit 119.90, the initial resistance, and finally broke through the psychological level of 120.00 in early trading this morning.
The EURJPY dropped to 162.50 in early trading this morning, but found strong support to trade it back to 163.00. If weakness is to be found in the pair, look for the EURJPY to trade in the 162.20 � 162.40 level and close below the band. For now, the trend is up.
Today’s most interesting chart is Silver. The metal is trading near its two year trend-line support. The recent short-term high is not a higher high (did not break $14.75). Should silver find strong support at the $13.00 level, look to buy at $13.25 or higher for a move to $14.10. On the flip side, bears will sell below $12.90 for a move to $12.05.
Today’s Key Issues (time in GMT):
09.00 EUR Euro-Zone Unemployment Rate (MAR)
11.00 USD MBA Mortgage Applications (Apr 27)
11.30 USD Challenger Job Cuts (YoY) (APR)
12.15 USD ADP Employment Change (APR)
13.30 USD Fed’s Poole Speaks at Community Development Conference
14.00 USD Factory Orders (MAR)
14.00 USD Factory Inventories (MAR)
14.30 USD EIA Crude Oil Stocks (Apr 27)
14.55 EUR ECB’s Papademos Speaks In Athens
15.00 USD Treasury’s Paulson Discusses China’s Economy
16.00 EUR Italian New Car Registrations (YoY) (APR)
17.00 EUR Italian Budget Balance (APR)
17.00 EUR Italian Budget Balance (Year to date) (APR)
The Risk Today:
EurUsd: three days in a row, the pair attempted to break 1.3680. With the pair trading at 1.3590 and should support not fail, look for a move to 1.3700 and 1.3750. A break below 1.3475 is very bearish.
GbpUsd Considerable support is found at 1.9910 which is good news for cable bulls. Resistance remains at 2.0100 and any break below 1.9865 is very bearish.
UsdJpy There is fuel in the market above 120.00. Look for some resistance at 120.40, but an eventual move up to 120.80 is probable, which will signal a target of 121.85. On the downside, the pair is very well supported at 118.95.
UsdChf To break below 1.2095 would confirm a continuation of the downtrend. However, 1.2175 remains key at the moment and a close above this level can pull the pair up to 1.2285 as it retraces from its short term low of 1.1996.
Resistance and Support:
By James Brandt - ACM Advanced Currency Markets, Geneva, Switzerland