The Dollar stayed near a 26-year low against Sterling and two-month through versus the Euro, as investors awaited interest rate decisions by the Key Central Banks today.
The Yen was under broad pressure from the Bank of Japan’s 0.5% policy rate, the lowest among major countries, and the Central Bank’s repeated pledge to raise rates only gradually.
The Bank of England is widely expected to lift rates by 25 basis points to 5.75% after a two-day meeting that ends today, taking them further above the Federal Reserve’s 5.25% rate.
Also today, the European Central Bank and its president, Jean-Claude Trichet, are seen reinforcing expectations for higher rates in the euro-zone eventually, while keeping them on hold for now at 4%.
News and Events:
The Dollar stayed near a 26-year low against Sterling and two-month through versus the Euro, as investors awaited interest rate decisions by the Key Central Banks today.
The Yen was under broad pressure from the Bank of Japan’s 0.5% policy rate, the lowest among major countries, and the Central Bank’s repeated pledge to raise rates only gradually.
The Bank of England is widely expected to lift rates by 25 basis points to 5.75% after a two-day meeting that ends today, taking them further above the Federal Reserve’s 5.25% rate.
Also today, the European Central Bank and its president, Jean-Claude Trichet, are seen reinforcing expectations for higher rates in the euro-zone eventually, while keeping them on hold for now at 4%. Analysts said �if the ECB shows a hawkish stance, the Euro may extend its rise towards its record high against the Dollar�.
Trading is expected to pick up as the US Independence Day holiday was passing without incident after increased caution in view of last week’s bomb plot in Britain.
UsdJpy was little up yesterday +0.22% at 122.73, not far from its 4 �-year high of 124.15 hit in late June. EurUsd was little changed at 1.3619, off a two-month peak of 1.3639 hit on Monday, but remained within a sight of a record high at 1.3681 hit in April. GbpUsd was steady at 2.0161 after touching 2.0207 high yesterday, its highest level since 1981.
Traders said strength in global stock markets was supporting investors to hold on to their risky positions like carry trades like the high-yielding Australian Dollar against the low-yielding Japanese currency. AudJpy edged up 0.57% to 105.27, near a 16-year high of 105.38 hit late June.
Today’s Key Issues (time in GMT):
11.00 UK Bank of England Rate Decision 5.75% vs 5.5%
11.45 EUR European Central Bank Rate Decision 4% unchanged
12.15 US June ADP Employment Change 100k vs 97k
12.30 EUR ECB President Trichet speaks at press conference
12.30 EUR ECB’s Bini Smaghi speaks in Frankfurt
12.30 US June 30th, Initial Jobless Claims 315k vs 313k
14.00 US June ISM Non-Manufacturing 58 vs 59.7
14.00 CAD June Ivey Purchasing Managers Index 63 vs 62.7
The Risk Today:
EurUsd consolidated yesterday in 1.3585 - 1.3639 trading range. Focus shift on 1.3681 high from April 27th before 1.3750 trend high. A return below 1.3554 and 1.3522 former resistances will put the actual positive trend on hold. Any further set back lower than 1.3373 could open the way toward 1.3277 key support (50% retracement from 1.2872 to 1.3681 advance). Initial support holds 1.3346 last Friday high.
GbpUsd hit 2.0207 high yesterday adding strength on the 3-week bull trend from Friday 8 June. Initial support holds 2.0100 former resistance. On the down side, a return under 1.9900 could deep toward 1.9700 and 1.9659 (50% retracement of the 1.9184 to 2.0134 advance) next support.
UsdJpy consolidated on 122.10 support and 122.24 former Trendline. This double bottom line will renew strength for further focus on 124.15 late June high. A break toward 124.15 will reopen the way to 125.57 December 2002 high.
UsdChf reversed deeply from mid-June 1.2472 high and hit Monday 1.2092 two-month low. The 3-months high 1.2472 marks the strong resistance. On the current downtrend, focus shifted on 1.1996 trend low support. Former support 1.2178 marks the initial resistance before 1.2234.
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Resistance and Support:
By Jean-Claude Braha - ACM Advanced Currency Markets, Geneva, Switzerland