Forex Market Issues and Risks

Gold led commodities higher and weaker US stocks also weighed on the Dollar

News and Events:

The Dollar eased off against the Yen on Monday, stoping an 11-day advance as falling stocks and rebounding gold saw investors skim profits off a recent rally. But analysts said the Dollar's move, which also saw it retreat from a six-month high against the Euro, was only temporary and expected market participants to use the pullback as a buying opportunity.

Gold led commodities higher, taking some edge off the Dollar's powerful comeback. Weaker US stocks also weighed on the currency in a thin session on economic data. Sharp declines in US home finance providers Fannie Mae and Freddie Mac reminded investors that the credit crisis and housing slump were far from over, dragging stocks on Wall Street lower.

On Monday, EurUsd rose to session high 1.4768, but retreated to about 1.4701, up 0.12%. This occurred as Oil prices surrendered earlier gains in volatile trade. US stocks declined on views of more losses from the mortgage crisis; this weighted on UsdJpy from his Friday 110.70 high. UsdJpy was down 0.34% to 110.09.

German ZEW economic sentiment data due on Tuesday is expected to add to a raft of negative reports from the euro zone and views that the European Central Bank will have to cut interest rates soon to support growth. US housing and producer inflation figures also due out on Tuesday are unlikely to reveal anything new, analysts said.

The Gold bounced to a yesterday as high as 804.25 and boosted AudUsd and NzdUsd currencies. AudUsd touched a session peak of 0.8758 and ended up 0.22% to 0.8686. NzdUsd jumped 0.77% to 0.7102. Both the Aussie and Kiwi dollars have slumped in previous weeks as investors priced in expectations of interest rate cuts as their domestic economies slow.

Today Key Issues:

• 06:00 EUR July Producer prices 0.7% vs 0.9% (mom)
• 06:00 EUR July Producer prices 7.5% vs 6.7% (yoy)
• 09:00 EUR August German ZEW current conditions 10 vs 17
• 09:00 EUR August German ZEW economic sentiment -62 vs -63.9
• 12:30 USD July Building permits 970k vs 1138k
• 12:30 USD July Housing starts 960k vs 1066k
• 12:30 USD July Producer prices 0.6% vs 1.8% (mom)
• 12:30 USD July Producer prices core 0.2% vs 0.2% (mom)
• 12:30 CAD June Wholesale trade 0.7% vs 1.6% (mom)
• 14:00 USD Fishers speaks on the economy, Aspen
• 21:00 USD weekly ABC CCI -51 vs -50
• 00:00 JPY August Bank of Japan rate decision 0.5% vs 0.5%

The Risk Today:

EurUsd Market dropped as low as 1.4659 last week. Further weakness will put the focus on strong support 1.4366 22nd January low. Initial support holds 1.4659 Friday low. On the upside, only a return over 1.5000 and 1.5500 will release actual pressure and put key initial resistance 1.6000 into focus. Still a break up there would open the way to Trendline resistance 1.6200.

GbpUsd Cable hit 2.0158 high 5-weeks ago and 1.8513 low on Friday. On the downside, recent market break below 1.9105 former support (50% retracement of 1.7049 – 2.1162 advance) looks still strong. Initial support holds 1.8513 Friday low. On the upside, former support 1.9363 holds also strong resistance. Key level holds 2.0100 resistance.

UsdJpy Last 4-weeks recovery pushed the market up to 110.67 high last week. Further advance would open the way toward 111.92 early January high. On the downside, a return below 108.59 former resistance will undermine the current advance. Profit taking might bring back down to 105 level and may open the way toward 102.73 support and 100 pivot point. Initial support holds 108.37 last week low.

UsdChf Continuous Dollar strength pushed over 1.0800 last week and hit 1.1010 high on Friday. On the downside, initial support holds 1.0863. Only renewed weakness below 1.0500 and 1.0375 would retest the 1.0000 pivot point and may open the way toward 0.9637 17th March low.

ACM FOREX

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