NEWS / Foreign Exchange

Dollar Down Further On Housing Concern

10/25/2007 04:00 pm: EUR/$..1.4316 $/JPY..114.02 GBP/$..2.0512 $/CHF..1.1656 AUD/$..0.9074 $/CAD..0.9656

Dollar Down Further On Housing Concern

The dollar dropped further against the euro and yen as worse-than-expected reports today raised concern on the nation????s economic growth outlook.

US weekly jobless claims fell slightly from 337k to 331k, worse than the estimate of 320k. Durable goods orders unexpectedly dropped 1.7% in September, far below the forecast of a 1.5% rise. New home sales slid from 795k to 770k in September, raising concern on the housing slump.

The euro approached a record high hit recently at 1.4344 versus the dollar, and the yen strengthened to as low as 113.79 against the dollar. The dollar is under pressure as the Fed is widely expected to lower rates again next week.

Interest-rate futures indicated traders are pricing in a 90 percent chance that the Fed will cut its interest rates by a quarter-percentage point to 4.50 percent at its next policy meeting on October 31.

Besides, the rally in sterling against the dollar was limited by a report issued today. The Bank of England Financial Stability Report warned that credit crunch might post further risks to the nation????s financial market.

Tomorrow will see University of Michigan consumer sentiment out at 10:00 EST. The index is expected to fall from 83.4 to 82.0 in October.

EURUSD will face interim resistance at 1.4350, followed by 1.4380 and 1.44. Additional ceilings will emerge at 1.4430, backed by 1.4450. Support starts at 1.43, backed by 1.4270, 1.4250 and 1.4230. Subsequent floors are eyed at 1.42.

GBPUSD encounters interim resistance at 2.0550, backed by 2.06 and 2.0650. Subsequent ceilings will emerge at 2.0680, followed by 2.07 and 2.0720. On the downside, support begins at 2.05, followed by 2.0470 and 2.0450. Additional floors are eyed at 2.0430, backed by 2.04 and 2.0350.

USDJPY encounters interim resistance at 114.30, backed by 114.50 and 114.80. Subsequent ceilings will emerge at 115, followed by 115.20 and 115.50. On the downside, support begins at 114 and 113.80, followed by 113.50. Additional floors are eyed at 113.20, backed by 113 and 112.70.