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Date: Tue, 5 Mar 2002 04:54:21 -0800 (PST)
From: info@forexnews.com
To: sara.shackleton@enron.com
Subject: US Trading Preview
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[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: 1.75% 0.15% 3.=
25% 4.0% 1.25-2.25% [IMAGE] =09 [IMAGE] JPY Tests USD Bulls, EuroF=
x Steady After Upbeat Data March 5, 7:00 AM: EUR/$..0.8675 $/JPY..131.89 G=
BP/$..1.4203 $/CHF..1.6995 JPY Tests USD Bulls, EuroFx Steady After Upbeat=
Data by Jes Black At 8:40:00 AM US Redbook (exp n/f, prev 0.6%) At 9:00:0=
0 AM US BTM/UBSW sales (exp n/f, prev -0.4%) At 10:00:00 AM US Feb ISM non-=
mfg survey (form. NAPM) (exp 51, prev 49.6) The yen challenged overnight 2=
-week highs of 131.80 against the dollar and pushed to a day's high of 114.=
40 against the euro despite upbeat economic data from the US and Eurozone o=
ver the past week. Yen strength is based on hopes and fears and not sound e=
conomic fundamentals. But the dollar's recent failure to benefit from stron=
g data and Wall Street's surge has left bulls feeling uncertain. Therefore,=
currencies continue to trade familiar ranges with trends hard to find. Th=
e European majors gave back some of their overnight gains against the dolla=
r despite positive services PMI data from the Eurozone and UK. E12 services=
index expanded for the second month in a row rising to 51.5 in February fr=
om 51.0. New business also rose to 50.6 from 49.7, indicating the first ris=
e in new business since the summer. The news raises hopes that a Eurozone e=
conomic recovery is around the corner. The data showed France and Italy lea=
ding the recovery, while the rate of decline eased in Germany. More impor=
tantly, unemployment improved to 8.4% in January despite how weak output ha=
s been. Coupled with stronger than expected E12 PMI data and a further gain=
in consumer confidence the ECB is expected to keeps rates unchanged at 3.2=
5% on Thursday. In fact, financial markets are already pricing in a quarter=
percentage point ECB rate rise by June. The German DIW institute head also=
doesn't expect more ECB rate cuts in this cycle, saying the next move is u=
p. Bank of France head Jean-Claude Trichet reiterated on Tuesday his view =
that a strong euro was "in the best interests" of the euro zone economy. Bu=
t traders were hard to convince as they pushed EUR/USD to a day's low of 86=
.73 after twice failing to maintain above 87 cents. The pair gave up overni=
ght gains and could fall back towards last week's 3-week low of 86.25 if it=
is unable to break resistance at 87.15. Traders are not encouraged by Euro=
zone prospects and sentiment is again turning bearish enough to target a mo=
ve through 86.30/15 on its way to its 6-month low of 85.63. But technical i=
ndicators are mixed. Support is seen at 86.60, 86.30, 86.15, and 85.60. Res=
istance is viewed at 87.10, and 87.85. GBP/USD also fell to a day's low of=
1.4204 after twice failing to break strong resistance seen at 1.4240. Resi=
stance is eyed at 1.4240, 1.4280 and 1.430. Support holds at 1.4180 and 1.4=
130. A break of 1.4110 would put 1.4045 under pressure and be seen as a bea=
rish signal. Sterling was also unable to leverage good services PMI data in=
to gains after Britain's dominant services sector expanded for the second m=
onth running in February to 51.5 from 51.0. The figures also support the co=
nsensus estimate that the BoE, which also meets on Thursday, will keep rate=
s unchanged this week at a 38-year low of 4.0 percent. Moreover, indicatio=
ns from today's PMI data show that both input prices and prices charged in =
the UK and E12 have fallen over the last month, which will reassure central=
bank members that monetary tightening to contain inflation is not a pressi=
ng concern. Meanwhile, JPY resumed its recent rise and targeted the key 13=
1.85 mark against the dollar today for the second time this week. Its diffi=
cult to ascribe a good fundamental reason from the strength. But traders at=
tribute it to Monday's 5.9% rise in the Nikkei to a 6-month high of 11,450,=
repatriation fears and hopes that Japan may finally tackle its non-perform=
ing loan problems. Recent measures to support Japanese asset prices also gi=
ves Japan's capital-weak banks a needed (if artificial or temporary) boost =
ahead of mark to market fiscal year end on March 31. Were USD/JPY to break=
key support at 132.00/131.80 it would have a bearish implication for the p=
air and would open up a downside target of 130.45. But the recent sell off =
may have bottomed again at the 131.80 mark, where stop loss orders are bein=
g protected. Upside capped at 133.0, 133.50 and 133.70, 134.00/10, 134.70/8=
5 and strong resistance at 135.15. Support holds at 132.20 and 131.80. Des=
pite USD losses across the board on Monday, US stocks soared on hope that t=
he US economy is on the verge of recovery based on recent affirmative econo=
mic data. The Dow skyrocketed 2.1% or 217 points to 10586 and NASDAQ rose 3=
.1% or 56 points to 1859. Therefore, dealers will look to see what today's =
services PMI data says in US. Both European figures showed modest gains aft=
er breaking back above the 50 mark into expansion in January. US non-manufa=
cturing ISM survey is expected to break above the key 50-level to 51.0 in F=
ebruary from the previous 49.6, thereby indicating growth in the services s=
ector. While this is a positive confirmation for the improvement in the US =
economy, reaction in FX markets is likely to be muted ahead of Thursday's m=
onetary policy speech by Greenspan and Friday's key US labor market report.=
=09[IMAGE] Audio Mkt. Analysis JPY Drags Down USD to 2 1/2 Week Low =
Articles & Ideas Euro: The Lonely Tender JPY: Koizumi Fails To Deliver =
Articles & Ideas Forex Glossary Economic Indicators Forex Guides =
Link Library [IMAGE] =09
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