01:18 2007/04/26
The dollar extended its loss against the euro and sterling
4/25/2007 03:00 pm: EUR/$..1.3638 $/JPY..118.70 GBP/$..2.0018 $/CHF..1.2042 AUD/$..0.8327 $/CAD..1.1149Dollar Extended Loss after New Home SalesThe dollar extended its loss against the euro and sterling after lower-than-expected US new home sales reinforced expectations for a Fed rate cut as early as October. The euro rose to 1.3665, close to the record peak at 1.3670. The sterling climbed back to above the 2 handle versus the dollar.
US new home sales rose 2.6% to an annual rate of 858k units in March, but below the consensus of 888k. Recall that the sharp decline in March existing home sales induced a dollar sell-off yesterday. The lackluster data today put the slowing housing sector in the spot light again.
Earlier, the dollar edged up slightly after durable goods orders rose 3.4% in March, beating the estimate of 2.5%. However, a single upside surprise in such a volatile indicator is not sufficient to challenge the expectations of the economy and the Fed rate outlook. Euro Rose on Upbeat German IFOGermany IFO report released today beat the expectations, adding fuel to the euro rally. The IFO headline rose to 108.6 in April, above the consensus of 107.9 and 107.7 a month earlier. Current conditions index also came in above the estimate at 113.2, up from 112.4 in March. European officials repeated recently that the euro zone economy can stay with current level of the euro foreign exchange rate, giving green light to further strengthening in the single currency. With at least one more ECB rate hike in sight, we expect the euro rise to 1.40 by the year end.
EURUSD will face interim resistance at 1.3650, followed by 1.3670 and 1.37. Additional ceilings will emerge at 1.3730, backed by 1.3750. Support starts at 1.36, backed by 1.3580, 1.3550 and 1.3520. Subsequent floors are eyed at 1.35.
GBPUSD encounters interim resistance at 2.0030, backed by 2.0050, and 2.0070. Subsequent ceilings will emerge at 2.0100, followed by 2.0130 and 2.0150. On the downside, support begins at 2.0000, followed by 1.9970 and 1.9950. Additional floors are eyed at 1.9930, backed by 1.9900 and 1.9850.Yen In ConsolidationThe USD/JPY pair is still trading in a narrow range between 118.20 and 119. A larger trade surplus reported earlier did not help the yen much. Japan trade surplus widened to 1.64 trillion yen, compared with the consensus of 1.38 trillion.
USDJPY encounters interim resistance at 118.80, backed by 119 and 119.30. Subsequent ceilings will emerge at 119.50, followed by 119.80 and 120. On the downside, support begins at 118.50 and 118.20, followed by 118. Additional floors are eyed at 117.70, backed by 117.50 and 117.30.
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