05:42 2007/03/24
The dollar extended its gains after an upbeat housing data
3/23/2007 01:10 pm: EUR/$..1.3293 $/JPY..117.94 GBP/$..1.9624 $/CHF..1.2172 AUD/$..0.8053 $/CAD..1.1605
Dollar Rose Following Upbeat Existing Home Sales
The dollar extended its gains after an upbeat housing data temporarily relieved some of the worries about the US housing market.
US existing home sales rose 3.9% in February to an annual rate of 6.69 million units, beating the estimate of 6.31 million units. This was the biggest rise since March 2004. Traders reduced the odds on a Fed rate cut in the first half of the year after the data release. The dollar strengthened to 1.3289 and 1.9589 versus the euro and the sterling respectively.
GBPUSD encounters interim resistance at 1.9660, backed by 1.9690, and 1.9720. Subsequent ceilings will emerge at 1.9750, followed by 1.9780 and 1.98. On the downside, support begins at 1.9620, followed by 1.96 and 1.9580. Additional floors are eyed at 1.9550, backed by 1.95 and 1.9450.
Euro Pared Gains on Rate Outlook
The euro failed to retain gains against the dollar as the market doubted whether the ECB will raise rates in the near term after ECB member????s dovish comments and weak economic data from the euro zone.
ECB council member Gospari said today the current interest rates are appropriate and it is too early for the central bank to discuss further tightening. French household consumption fell 0.4% in February. Italy retail sales dropped 0.4% in January, worse than the estimate of a 0.2% rise.
EURUSD will face interim resistance at 1.33, followed by 1.3340 and 1.3380. Additional ceilings will emerge at 1.34, backed by 1.3420. Support starts at 1.3290, backed by 1.3260, 1.3230 and 1.32. Subsequent floors are eyed at 1.3150.
Yen Weak as Carry Trade Rebuild
The yen remains weak with dollar breaking 118 handle and the sterling standing firm above 230. USD/JPY faces major resistance around 118.30-50 area and is well supported at 116.50-117. Investors get more nervous about carry trade after large amount of carry trade unwinding in February. The yen is likely to float actively within the range as some investors are rebuilding carry trades while others are unwinding them.
USDJPY encounters interim resistance at 118.30, backed by 118.50 and 118.70. Subsequent ceilings will emerge at 119, followed by 119.30 and 119.50. On the downside, support begins at 118 and 117.70, followed by 117.50. Additional floors are eyed at 117.20, backed by 117 and 116.50.
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