Mid-Day Report: Dollar Steady after Existing Home Sales, Yen Weakens

Carry trades is the focus in early US session today. US equity markets opened higher following news that JPMorgan Chase increased its offer for Bear Stearns five fold from $2 per share to $10. The stock markets are additional boosted by stronger than expected existing home sales report from US. Sales unexpected rose for the first time in seven months by 2.9% in Feb to 5.03M annualized rate. The data suggests that there might be a temporary pause in the housing market crash. The Japanese yen and Swiss Franc are generally lower across the board. Commodity currencies, including Aussie and Loonie extend rebound in respective crosses as well as against dollar.

The greenback remains relatively steady in tight range against Euro and Sterling as markets' focus lies elsewhere. Gulf Finance House's chief economist al-Yousuf said that Gulf Cooperation Council member states should not rush to depeg from dollar in short term and expects dollar to rebound in second half of 2008.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.5399; (P) 1.5436; (R1) 1.5467; More

EUR/USD's correction from 1.5902 extends further to 1.5342 before turning sideway. At this point, further decline is still mildly in favor to 1.5277 cluster support (38.2% retracement of 1.4309 to 1.5902 at 1.5293). Though, downside is expected to be contained there. On the upside, above 1.5475 minor resistance will turn intraday outlook neutral first. Further break of 1.5567 resistance will suggest that that correction from 1.5902 has completed and bring retest of this high.

In the bigger picture, rise from 1.4309 has just missed 100% projection of 1.3360 to 1.4966 from 1.4309 at 1.5915. Though, the structure of the rise from 1.4309 suggest that there should at least be another rally attempt, probably to 1.6000 psychological resistance before completing the rise. However, firm break of 1.5277 cluster support will argue that 1.5902 is likely a medium term top and deeper correction should be seen to 1.4309 and 1.4966 support zone.

Forex News Digest

JPMorgan Quadruples Bear Stearns Bid to $2 Billion After Shareholders Balk

Existing Home Sales in U.S. Unexpectedly Climb, First Gain in Seven Months

Bernanke's Next Move May Be to Buy Mortgage Bonds, Treasury Investors Bet

Yen Falls as Advance in U.S. Stock Futures Spurs Demand for Higher Yields

Dollar Fluctuations Make Traders Whisper `I' Word as Group of Seven Frets

Canadian Dollar Rebounds From Two-Month Low as Stocks Gain in U.S., Canada

Recession in U.S. Sows Slow-Growth Economy, Weak Dollar, Faster Inflation

U.K. Home Sellers Must `Get Smart,' Anticipate Price Cuts, Rightmove Says

Gulf States Shouldn't Change Dollar Peg in Short Term, Gulf Finance Says

Dollar Up in Europe
Mon, 24 Mar 2008 11:01:00 GMT from Yahoo! Canada

Dollar Gains Strength in Europe As Commodities Continue Descent
Mon, 24 Mar 2008 11:01:00 GMT from Canadian Business Magazine

Aussie dollar takes a dive
Mon, 24 Mar 2008 10:51:00 GMT from Brisbane Courier-Mail

Dollar rebounds as commodities ease; mkt adjusts bets
Mon, 24 Mar 2008 10:37:00 GMT from Reuters South Africa

Dollar rebounds, but worries linger
Mon, 24 Mar 2008 10:31:00 GMT from Fortune

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