The US dollar remains weak across the board as traders await the FOMC monetary policy decision on Wednesday afternoon. Even after the 75 basis point rate cut to 3.5% last week, the market is still expecting a 50bp cut tomorrow. Gold traded at a record high of $930 per ounce.
News and Events:
The US dollar remains weak across the board as traders await the FOMC monetary policy decision on Wednesday afternoon. Even after the 75 basis point rate cut to 3.5% last week, the market is still expecting a 50bp cut tomorrow. The Euro has not been too quick in appreciating against the dollar as the European Central Bank has indicated that its tightening plan is behind schedule and that further US rate cuts could fend off the looming US economic recession. At the end of the week, traders await the non-farm payrolls and employment figures. Unemployment is largely expected to remain at 5.0%
The weakness in the dollar has given another major boost to Gold, which traded at a record high of $930 per ounce. The psychological $1,000 mark now seems achievable given the current global economic climate and various political instabilities. With the rush of capital inflow to commodity funds and overall uptrend in primary materials, the precious metals have delivered superior returns, amid falling equity indices. Silver has kept pace, hitting a high of $16.7765 an ounce.
Today’s Key Issues (time in GMT):
09:00 EUR ECB Euro-Zone Current Account NOV
09:00 EUR Euro-Zone Current Account nsa NOV
11:00 GBP U.K. CBI January Distributive Trades Reported Sales
13:00 EUR IFO Dec. Business Climate Survey by Industry (Table)
13:30 CAD Business Conditions Orders JAN -6.5 vs -3
13:30 USD Durable Goods Orders DEC 1.90% vs 0.10%
13:30 USD Durables Ex Transportation DEC 0.00% vs -0.70%
14:00 USD S&P/CS Composite-20 YoY NOV -7.10% vs -6.10%
14:00 USD S&P/CaseShiller Home Price Ind NOV
15:00 USD Consumer Confidence JAN 87 vs 88.6
19:15 USD U.S. Federal Reserve Open Market Committee Meeting
22:00 USD ABC Consumer Confidence Jan-27
The Risk Today:
EurUsd is back in bullish territory as it bounced back into its upward channel, breaking through resistance at 1.4672. Expect the pair to make a triple-top at 1.4910. On the downside, bears will jump back in below 1.4523.
GbpUsd has broken out of its downward channel for the first time since the downtrend began on Nov 9th. Should the pair hold above 1.9765, expect a near-term target of 2.0137, a key level for the pair. A breach of 1.9765 again would open the door down to 1.9560 and ultimately 1.9177, the March 5th low.
UsdJpy has conveniently consolidated at 106.50, the low of June 7th, 2005, a strong support level. The only significant levels for now are 104.22 and 102.01. The pair is not bullish until a clear breakout above 111.49.
UsdChf is trading near its ultimate low of 1.0838, a level not seen in at least 30 years. A break below would be extremely bearish. At the moment, the pair seems ready to bounce back to 1.1114.
Resistance and Support:
By James Brandt - ACM Advanced Currency Markets, Geneva, Switzerland