You beat me to the dollar post<g>.
Congrats to all gold holders, today could be the start of a nice run (at least a nice couple of weeks anyway).
Friday September 22nd 2000, 7:48 AM
US FX Daily Outlook: Joint Intervention Sends Euro/Dollar Soaring
By Kyle Peterson, BridgeNews
Chicago--Sept. 22
The European Central Bank (ECB), the US Treasury, the Bank of Japan (BOJ) and the Bank of England (BOE) entered the market in unison just prior to US trade Friday to buy euros, sending the currency to 25-day highs of 90.40 cents and 96.20 cents, respectively. The joint intervention was confirmed immediately, but, so far, it is unknown how much euro/dollar the central banks bought. Both euro/dollar and euro/yen trimmed gains quickly.
Dollar/yen gave a relatively muted reaction to the intervention, briefly turning negative. It then reentered positive territory and extended its gains to a two-day high of 107.35. The pair fell back overnight from a two-day high reached in Asia after an Intel profit warning.
Dollar/Swiss franc fell to a 25-low of 1.7100, while sterling/dollar moved with euro/dollar to hit a 25-day high of 1.4790.
Uninspired by euro gains, dollar/Canadian dollar jumped to an eight-day high of 1.4923. Resistance for dollar/Canada is pegged at the Sept. 14 high of 1.4933.
All eyes remain on the G7 meeting this weekend. But with the intervention question out of the way, the market will be left to ponder the effectiveness of the move. At 1000 ET, the market will watch U.S. Treasury Secretary Lawrence Summers who will speak ahead of the meeting in Prague.
U.S. traders are likely to buy euro/dollar, while the outlook for dollar/yen is mixed.
Current Previous Change Global Global
NY open NY close low high
USD/JPY 106.89 106.64 0.25 106.40 107.35
EUR/USD 0.8868 0.8603 0.0265 0.8573 0.9040
EUR/JPY 94.80 91.70 3.10 91.55 96.20
GBP/USD 1.4650 1.4374 0.0276 1.4351 1.4790
USD/CHF 1.7275 1.7635 -0.0360 1.7100 1.7693
USD/CAD 1.4911 1.4866 0.0045 1.4863 1.4923
Meanwhile, the Bank of Canada joint the intervention, but the Swiss National Bank refrained.
* EUR/USD flew to 25-day highs of 0.9040 high on the joint intervention, but the gains didn't stick. The pair immediately returned some of those gains and fell back. Prior to the central bank action, EUR/USD extended Thursday's pre-Group of Seven short-covering rally amid some talk that the ECB was buying euros for part of its 2.5 billion euro repatriation.
German Chancellor Schroeder supported the pair overnight saying "we are interested in a strong euro." That conflicts with his previous statement that a weak EUR is good for German exports.
The outlook is mixed.
Support: 0.8722 (20-day moving average), 0.8573 (overnight low), 0.8439 (Sept. 20 low; lifetime low), 0.8420 (support line declining since June 26).
Resistance: 0.9040 (overnight high), 0.9067 (60-day moving average), 0.9113 (Aug. 7 peak).
* USD/JPY quickly dropped before and recovered after the intervention news. The pair then extended overnight gains to a new 2-day high of 107.35. USD/JPY hit its original 2-day high in Asia, but trimmed gains on a fall in the Japanese benchmark stock index. The pair suffered on news of a 3Q profit warning for Intel.
The outlook is slightly bullish.
Support: 106.75 (Gann 50-point pivot; targets: 106.25/107.25), 106.45 (20-day moving average), 106.40 (overnight low), 105.81 (61.8% Fibonacci retracement level of the Apr 1995-Aug 1998 rally), 105.60 (Gann 50-point pivot; targets: 105.10/106.10), 104.75 (Sept. 7; 10-week low), 104.50 (Gann 50-point pivot; targets: 104.00/105.00), 103.91 (June 23 trough), 103.40 (Gann 50-point pivot; targets: 102.90/103.90).
Resistance: 107.35 (overnight high), 107.59 (rising 4X1 Gann fan line of April 95-Aug. 98 rally), 107.62 (60-day moving average), 107.78 (38.2% Fibonacci retracement level of the Nov.-Feb. rally), 107.95 (Gann 50-point pivot; targets: 107.45/108.45), 108.07 (resistance line declining since Jul. 8, 1999), 109.15 (Gann 50-point pivot; targets: 108.65/109.65).
* EUR/JPY flew to a 25-day high of 96.20 on the intervention. But, like EUR/USD, the cross trimmed gains quickly. Overnight, EUR/JPY also was climbing on pre-G7 short-covering
The outlook is slightly bullish.
Support: 92.86 (20-day moving average), 91.55 (overnight low), 90.05 (Sep. 20 low; all-time low), 87.99 (support line declining since Aug. 9), 86.49 (support line declining since Aug. 23), 88.33 (1.382% Gann extension target of the Feb. 23-May. 19 downtrend), 87.80 (target of bear flag formed since Aug 16).
Resistance: 96.20 (overnight high), 97.69 (60-day moving average).
* GBP/USD leapt to a 25-day high of 1.4790 on the intervention to lift the euro. Overnight, the pair had been climbing alongside EUR/USD on short-covering.
Positive M&A news aided the rise. Cable soon trimmed gains after the intervention, slipping back to 1.4650.
The outlook is mixed.
Support: 1.4411 (38.2% Fibonacci retracement level of the Aug. 15-Sept. 12 decline), 1.4351 (overnight low), 1.4307 (20-day moving average), 1.3955 (Sept. 12 low; 14-year low), 1.3945 (Oct. 30, 1986, trough), 1.3660 (Feb. 4, 1986, trough), 1.2900 (Sept. 9, 1985, trough).
Resistance: 1.4790 (overnight high), 1.4655 (Sept. 4 high)
US KEY ECONOMIC DATA/EVENTS IN THE U.S. (Stories .55 and .4697)
WORLD WEEKLY FINANCIAL CALENDAR (Story .1069)
--1000 ET: U.S. Treasury Secretary Lawrence Summers holds preview news conference in Washington on his weekend visit to the Group of Seven Finance Ministers meeting in Prague
UPDATE OF NEWS (Story .334)
European Central Bank announces intervention to prop euro
Frankfurt--Sept. 22--The European Central Bank has announced it has started an intervention on the foreign exchange market on behalf of the euro in cooperation with the U.S. Federal Reserve and the Bank of Japan. The ECB said the intervention was prompted by a shared concern about the latest developments in the euro exchange rate. (Story .14619 )
Japan's Kamei expects G7 to call for stabilization of oil prices
Tokyo--Sept. 22--Liberal Democratic Party policy chief Shizuka Kamei said he was "still concerned" that soaring oil prices, which reached 10-year high earlier this week, would hurt the Japanese economy. Kamei added that he expects finance ministers and central bankers from the Group of Seven industrialized countries "to call for international cooperation for the stabilization of oil prices in their joint declaration" this weekend. (Story .24130 )
German August state inflation data above forecast so far
Frankfurt--Sept. 22--German consumer price index figures for individual states are currently being released. Following higher-than-expected inflation data for the states of Bavaria and Hesse so far, Bridge Fokus Deutschland now forecasts September pan-German CPI as up 0.3% on the month and up 2.3% on the year. (Story .1650)
German producer prices up slightly but below forecast in August
Frankfurt--Sept. 22--German producer prices were up 0.3% in August from July and were up 3.5% on the year, the Federal Statistics Office in Wiesbaden said. A Bridge News/Fokus Deutschland survey of economists forecast the German August PPI as up 0.4% on the month and up 3.6% on the year. (Story .1644 )
EU's De Palacio unhappy on oil policy coordination
Milan--Sept. 22--Policy coordination between the countries of the European Union on the oil crisis is not good enough and the EU Commission will soon verify whether the tax breaks on energy introduced by some EU governments are licit or not, said Loyola de Palacio, EU Commissioner for Transport and Energy in Italian daily Il Sole 24 ORE. (Story .12513 )
Euro-zone July current account posts deficit vs. surplus year ago
Frankfurt--Sept. 22--The euro zone posted a current account deficit of 2.2 billion euros in July, compared with a 6.4-billion-euro surplus a year ago, the European Central Bank said. The ECB said July current account deficit, "as in previous months, was due mainly to a decline in the goods surplus, combined with higher deficits for both income and current transfers, while the balance for services shifted from a small deficit to a slight surplus." (Story .750 )
Gore urges OPEC to "stabilize" oil prices
Washington--Sept. 21--Vice President Al Gore Thursday urged OPEC nations to "live up to their promises" and take action to "stabilize" oil prices. Gore, in an environmental speech in Maryland, also said he would "stand up" to big oil companies as president. (Stories .17566, .13944 )
UK Tories call for Chancellor Brown to quit
London--Sept. 22--U.K. Conservative Party Treasury spokesman Michael Portillo renewed his call on Chancellor of the Exchequer Gordon Brown to resign over allegations he lied over a donation by Formula One motor racing head Bernie Ecclestone to the ruling Labour Party. In a Channel 4 interview Brown denied having lied, but Portillo said the Chancellor's remarks were "misleading" and that he should go. "It is a matter of honor," Portillo said in a radio interview Friday. (Story .12811 )
ECB says it can't offset oil impact, but must ensure price stability
Frankfurt--Sept. 21--The European Central Bank said monetary policy cannot offset short-term swings in inflation rates caused by higher oil prices, but must ensure that medium-term price stability is maintained. Amid prospects for strong growth, its policy must contain the risk of ongoing upward pressure on prices spilling over onto the domestic economy, the ECB said. It would continue to remain alert to such risks, it said. (Story .783 )
Summers to seek stronger IMF, World Bank role against corruption
Washington--Sept. 21--U.S. Treasury Secretary Lawrence Summers in coming days will push for a stronger role for the International Monetary Fund, the World Bank and regional development banks in fighting corruption, Deputy Secretary Stuart Eizenstat said Thursday. (Story .16502 )
Fed's McTeer says risks still tilted toward higher US inflation
Dallas--Sept. 21--Dallas Federal Reserve Bank President Robert McTeer on Thursday said the balance of risks were still tilted toward higher U.S. inflation and said he sees the risk of a hard landing scenario for the U.S. economy as "pretty low." ( Story .21082 ) |
