Message-ID: <6718474.1075858803109.JavaMail.evans@thyme> Date: Mon, 22 Oct 2001 04:31:02 -0700 (PDT) From: info@forexnews.com To: sara.shackleton@enron.com Subject: US Trading Preview Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable X-From: @ENRON X-To: Shackleton, Sara X-cc: X-bcc: X-Folder: \SSHACKL (Non-Privileged)\Shackleton, Sara\Deleted Items X-Origin: Shackleton-S X-FileName: SSHACKL (Non-Privileged).pst [IMAGE] Forums Discuss these points in the Forums: Forexnews Forum T= echnicals Live Charts Analysis available from: Cornelius Luca J.P. Chorek= Technical Research Ltd. Charts & News featuring Standard & Poor's = Interest Rates US: Japan: Eurozone: UK: Switzerland: 2.5% 0.15% 3.7= 5% 4.5% 1.75-2.75% [IMAGE] =09 [IMAGE] USD Adds To Gains As Growth= Concerns Hurt EUR, JPY October 22, 7:00 AM: EUR/$..0.8976 $/JPY..121.66 G= BP/$..1.4310 $/CHF..1.6449 USD Adds To Gains As Growth Concerns Hurt EUR, = JPY by Jes Black At 10:00:00 AM US Sept. Leading Indicator (exp -0.4%, pre= v -0.3%) At 2:00:00 PM US Sept Fed Budget (exp 28.6 bln, prev -79.9 bln) T= he dollar added to last week's gains, rising across the board in both Asian= and European trading this morning. EUR/USD revisited Friday's low of 89.67= while the dollar continued to test heavy resistance around 121.70 yen. Dea= lers drove the dollar higher for both internal and external reasons. Helpin= g the dollar was the US equity market's resilience last week in the face of= the first barrage of Q3 corporate earnings reports. Anthrax scares also fa= iled to move the market by the end of the week, thereby helping the dollar = despite the obvious risks of bio-terrorism. With the risk-aversion problem = fading for the dollar, dealers have reassessed relative growth rates amongs= t the majors and found the US economy to have better long-term prospects. = Weakness in the other major currencies can be attributed to the underlying= market perception that aggressive fiscal and monetary policy will pay off = for investors who bet on the US recovery. Last Friday's German Ifo survey a= dded weight to that view. The September survey posted the worst figure in 8= years and the biggest point decline in 28 years, as it fell to 85.0 from 8= 9.5. This put the market on recession watch, as it reinforced fears of a po= ssible contraction in German growth for Q4, which would put even Finance Mi= nister Eichel's 0.75% 2001 growth target at risk. The Ifo report has also s= haken confidence that the Eurozone economy would outpace the US over the ne= ar-term and has increased the risks of a contraction in the Eurozone, even = though a technical recession is still unlikely. According to the Organizati= on of Economic Cooperation and Development's latest release, the outlook fo= r world economies is now the worst since 1982. US 2002 growth was revised d= own to 1.3% from the earlier 3.1%, while EU 2002 growth forecast was revise= d to 1.5% from 2.7%. Falling economic growth has led to rising budget def= icits and higher unemployment in the Eurozone. This has put the European Ce= ntral Bank under intense pressure to lower rates, and it will again be at t= he forefront of investor thought when it meets this Thursday. But even thou= gh the Ifo survey was very bad, European Central Bank members did little to= calm investors' nerves last week. This will likely keep pressure on the eu= ro as markets gauge whether or not the ECB will appease politicians and bus= inesses with another rate cut. However, even if the ECB were to lower rates= , the market reaction could be muted because it has already been priced in = for some time now. Therefore, the euro again finds itself in a lose/lose si= tuation because the ECB has failed to be promote growth. Moreover, accordin= g to data released from the Chicago Mercantile Exchange, since October 9, w= hen EUR/USD was trading around 92.20, there has been a 20% unwinding of eur= o long positions by non-commercial accounts. But the market is still long e= uro and the heavy selling could continue if the ECB does not cut rates. EU= R/USD maintained above yesterday's low at 89.67. Follow-up support is seen = at 89.43, the descending channel support line from 93.35, followed by 88.40= , the 50% Fibonacci retracement of the move from 83.48 to 93.45. EUR/JPY ma= naged to recover most of Friday's losses, to regain the 109 level. Strong r= esistance is still seen at 109.50 but further weakness in the Japanese econ= omy will help to push EUR/JPY higher. The yen also fell against the dolla= r to a day's low of 121.70. A sharp year-on-year decline in Japan's trade s= urplus in September and a further drop of 0.1% in the MITI tertiary sector = index sent the yen tumbling across the board. However, dealers say that the= market has grown resistant to trading the yen lower because the constant s= tream of gloomy economic data is now expected. Therefore, more rangebound t= rade is expected in the yen this week. GBP/USD hit a fresh two-month low o= f 1.4315 as traders also came to favor the US economy's prospects over that= of the UK. Sterling has now confirmed its break below the 1.44 level, whic= h is the key 38.2% Fibonacci retracement of the move from 1.37 to this mont= h's 8-1/2 month high of 1.4836. A sustained break of the August 28 low of 1= .4375 is seen increasing the bearish outlook for sterling. But, sterling's = five-cent slide in two weeks may move into a stabilization period this week= as investors contemplate the recent sell-off. Boding well for the pound is= the fact that the Bank of England appears ready to ease monetary policy ag= ain in order to bolster economic growth. The decline in September inflation= below the 2.5% target will provide the central bank with leeway to cut int= erest rates again by another 25-bp this year and the BoE's willingness to s= pur growth (unlike the ECB) will benefit the pound. Support holds at 1.4320= , 1.430 and 1.4265. Upside capped at 1.4420, 1.4450 and 1.4480. Against the= euro, the pound also fell to a one-week low of 62.73 pence. USD/CHF regai= ned Friday's highs around 1.6450 before easing back again, but is still see= n supported above the key 1.64 level. The dollar's ability to maintain abov= e 1.63 will be needed for it to maintain its bullish trend as it targets th= e 1.65 level. However, any major negative developments for the US, at home = or abroad, would quickly translate into gains for the franc. No key data w= as released from the Eurozone or UK today making trade quiet as dealers awa= it the US leading indicators due at 10:00 AM. The negative impact from risi= ng jobless claims and falling stock prices is expected to push the leading = indicators figure down 0.4% in September after a 0.3% fall in the previous = month. Meanwhile, dealers will look to see if the dollar holds up as well = as it did last week in the face of poor earnings reports for Q3. About half= of today's earnings announcements will come after market close, thereby ke= eping trading volumes light in the regular session. One major sector repres= ented in earnings announcements after the bell today is financials, like Mo= ody's. Because of this, dealers may look to the war in Afghanistan for an i= ndication of the effectiveness of the US ground operation as troops search = for Osama bin Laden. The general lack of direction from Wall Street kept As= ian and European bourses relatively unchanged today, albeit in positive ter= ritory. US futures are down slightly ahead of the open. =09[IMAGE] Audio M= kt. Analysis Euro Crawls Up In Quiet Trading Articles & Ideas EURO: = German IFO Will Remind ECB to Build Growth Dollar Comeback Stopped by Ri= sk of Terrorism Articles & Ideas Forex Glossary Economic Indicators= Forex Guides Link Library [IMAGE] =09 =09=09[IMAGE][IMAGE] [IMAGE][IMAGE]=09 =09=09 This e-mail is never sent unsolicited. If you wish to unsubscribe f= rom this or any other Forexnews.com newsletters, please click here . =09