01:01 2007/03/20
The yen weakened broadly on Monday
3/19/2007 04:15 pm: EUR/$..1.3292 $/JPY..117.50 GBP/$..1.9435 $/CHF..1.2130 AUD/$..0.7990 $/CAD..1.1773Yen Weak Ahead of BOJ The yen weakened broadly on Monday as the chances that the Bank of Japan may raise interest rates tonight is very rare. The dollar rose from low 116 to 117.75 versus the yen, and the sterling gained 5 big figures against the currency as well. BOJ is scheduled to announce its rate decision around 1AM EST on Tuesday. It is widely expected that BOJ will keep the rate unchanged at 0.5%.
Besides, investors regained risk appetite after Asian and European stocks rally. Low yielding currencies, such as the yen and Swiss franc, bounced from lows as carry trades are rebuilt.
USDJPY encounters interim resistance at 117.75, backed by 118 and 118.30. Subsequent ceilings will emerge at 118.50, followed by 118.80 and 119. On the downside, support begins at 117.30 and 117, followed by 116.80. Additional floors are eyed at 116.50, backed by 116.30 and 116.
China Raised Rates over the WeekendChina raised interest rates on Saturday by 27 basis point for the third time to 6.39% in order to slow down the economic expansion. The Chinese yuan gained to 7.7369 versus the dollar, the highest since China ended its fixed exchange rate in 2005. China has seen a 51% spike in exports and a 2.9% growth in inflation. Dollar Awaits Housing DataThe dollar remained soft against the euro and sterling on concerns of US subprime mortgage issue. People are worried that subprime sector meltdown might spread to the broader economy.
US NAHB housing market index fell modestly from 40 to 36 in March, below the estimate of 38. The market is waiting for US existing home sales and building permits due tomorrow to further assess the housing conditions.
EURUSD will face interim resistance at 1.33, followed by 1.3330 and 1.3350. Additional ceilings will emerge at 1.3380, backed by 1.34. Support starts at 1.3280, backed by 1.3250, 1.3230 and 1.32. Subsequent floors are eyed at 1.3150.
GBPUSD encounters interim resistance at 1.9450 backed by 1.9470, and 1.95. Subsequent ceilings will emerge at 1.9530, followed by 1.9550 and 1.9580. On the downside, support begins at 1.94, followed by 1.9370 and 1.9350. Additional floors are eyed at 1.9320, backed by 1.93 and 1.9250.
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