01:00 2007/03/21
The sterling gained across the board
3/20/2007 03:00 pm: EUR/$..1.3309 $/JPY..117.14 GBP/$..1.9608 $/CHF..1.2120 AUD/$..0.8025 $/CAD..1.1606
Dollar Slumps vs Yen on China FX Reserves Remarks
The dollar slumped sharply against the yen in a knee-jerk reaction to a magazine reporting that China would stop accumulating foreign exchange reserves. The dollar fell from session high at 118 to 117 versus the yen.
Chinese central bank Governor Zhou Xiaochuan said in an interview with Emerging Markets magazine that ???many people say that foreign exchange reserves in China are large enough??? and they are not intend to go further. The majority of China??™s more than 1 trillion reserves are held in US dollars. However, it seems the market overreacted to his comments, since China has already said before that they will accumulate reserves in a new foreign investment agency.
The yen weakened broadly after Bank of Japan announced to keep interest rates unchanged at 0.5% as expected. BOJ Governor Fukui repeated that the central bank would adjust rates gradually. The bank retained its monthly assessment of the economy, noting that the growth is modest.
USDJPY encounters interim resistance at 117.30, backed by 117.50 and 117.80. Subsequent ceilings will emerge at 118, followed by 118.30 and 118.50. On the downside, support begins at 116.90 and 116.70, followed by 116.50. Additional floors are eyed at 116.30, backed by 116 and 115.50.
Inflation Data Boost Sterling
The sterling gained across the board after a report showed inflation grew faster than expected, bolstering the case for another rate hike soon. The sterling rose from around 1.9450 to above 1.96 versus the dollar.
UK Consumer Price Index rose at an annual rate of 2.8% in February, above Bank of England??™s target rate of 2%. Excluding food and energy prices, core index rose 1.7%.
GBPUSD encounters interim resistance at 1.9620 backed by 1.9650, and 1.9680. Subsequent ceilings will emerge at 1.97, followed by 1.9730 and 1.9760. On the downside, support begins at 1.94, followed by 1.96 and 1.9560. Additional floors are eyed at 1.9530, backed by 1.95 and 1.9450.
Dollar Eyes on FOMC
US housing starts rose from 1.408 million to 1.525 million units in February, above the estimate of 1.45 million. The building permits fell to 1.532 million, down from 1.571 million in the earlier month. Housing data released in these two days were basically in line with expectations, showing the housing market is slowing down gradually. With no surprisingly bad number to confirm the meltdown of subprime mortgage sector, the dollar took a break and awaits the Fed policy meeting ended tomorrow for indication on the economy outlook.
Australian dollar strengthened to a ten-year high of 0.8031 against the dollar on speculations that the central bank may raise interest rates in April.
EURUSD will face interim resistance at 1.3320, followed by 1.3350 and 1.3380. Additional ceilings will emerge at 1.34, backed by 1.3450. Support starts at 1.33, backed by 1.3270, 1.3250 and 1.32. Subsequent floors are eyed at 1.3150.
|
Printer-Friendly Version
Send This Page
Add to Favorites
Comments
News RSS Feeds
