aboali
14-01-2003, Tue 10:58 AM
- USD/JPY may fall further to 118.60 - 118.40 before rising to 119.80 - 120.00
- Fundamental Backdrop:
The dollar may rise versus the yen on expectations a report will show U.S. retail sales had their biggest gain in 14 months in December.
- The U.S. currency may also climb against the yen on speculation Japan may sell its currency to stem an ascent that erodes earnings for exporters. Zembei Mizoguchi, who took over as vice finance minister for international affairs today, said swings in the currency are ``unfavorable.'' "A stronger yen will hurt the Japanese economy,'' Hiranuma told reporters at a press conference. "As a general principle, it is better for the yen to weaken rather than strengthen.''
- The Euro ignored some strong industrial data out of Germany yesterday. German production was up a surprising 2.5% in November (m-o-m), outpacing expectations of +0.3%. This is the strongest m-o-m gain since July 2000, and following sizable declines in September and October. Firmer equity performance outweighed the data and gave the greenback stronger bids. To add to the The British pound also fell from near a three-year high against the dollar on speculation U.K. consumers are curbing spending.
FX Technicals:
USD/JPY fell to 118.75 and could extend losses to 118.60 - 118.40 before revisiting the 119.80 - 120.00 area. However, longer-term considerations still remain negative. The major technical outlook is still dictated by the large Head and Shoulders formation after the rally from the 101.28 Nov. 1999 trough. The technical long-term outlook requires a test of the 115.00 neckline further out during 1Q2003.
EUR/USD was weighed down by firmer equity markets overnight, but no change in the general scenario. Resistance at 1.0600 area is still holding up, and becomes a fact if the pair falls below 1.0500. That will likely extend losses to as low as the 1.0350/40 area again. However, further ascent beyond 1.0620 may altogether remove the pullback risk. In any case, the main uptrend should reassert and resume strongly thereafter. Serious resistance may come only at circa 1.0800 - 1.0900 during 1Q2003.
GBP/USD fell to as low as 1.5990 nut has bounced back to 1.6040 since then. The outlook will probably worsen thereafter and will probably lead the sell-off towards the 1.5875 area. Only a break of 1.6100 hypothetical resistance from here lessens the odds of a large downwards pullback. The uptrend should resume in any case thereafter, and major resistance in the current trading cycle is expected only at 1.6400 - 1.6500. USD/CHF has gone to 1.3787, and now runs the risk of a rallyback to at least the 1.3950 area. Break above 1.3960 may in fact trigger a rally back all the way to 1.4080. Whichever scenario prevails, the downtrend should resume thereafter. The major downtrend target remains at 1.3400 - 1.3300 during 1Q2003.
USD/CAD bear trend has been to as low as 1.5390, lower than expected -- the positive scenario is probably gone -- the triangle scenario is gone. There could be a small rebound to 1.5450 from there, but further declines could bring the currency much lower, perhaps to 1.5250.
AUD/USD continues to gain territory and has been to as high as .5865, per expectations. The uptrend zeroes in at .5870/75 resistance -- and may be followed by a correction to .5780 area. The currency pair however stands a good chance of breaking through the cap. A significant break of .5870 resistance may boost the currency to .6000. NZD/USD has been to a.5420 as expected, and may extend gains to .5430/40 -- firm resistance area. Fair degree of resistance at those levels could precipitate a pull back to .5350 area. But break through the cap lays the foundation for further NZD/USD to rise towards .5600 - .5700.
Here are the news and events that are making impact on the foreign exchange markets as of the moment: (January 14, 2003)
- Japanese stocks rose as NTT DoCoMo Inc. headed for its biggest gain in six weeks after the country's biggest mobile-phone company more than doubled new subscribers last month. The Nikkei 225 Stock Average added 0.8 percent to 8540.92, ending a four-day, 2.8 percent drop, at the 11 a.m. break in Tokyo. The Topix index gained 0.8 percent to 844.68, with DoCoMo alone accounting for almost a third of its advance. Elsewhere in the region, Taiwan's TWSE Index rose 0.5 percent, paced by AU Optronics Corp. and Chi Mei Optoelectronics Corp., after Salomon Smith Barney Inc. raised its recommendations on the flat-panel display makers because shipments have started increasing.
- Technology shares dipped and blue chips ended up a touch on Monday, as investors paused for breath after an early January stock-buying spree and braced for a slew of key corporate earnings reports due later this week. The broad Standard & Poor's 500 index has risen more than 5 percent so far this year as bargain-hunting investors snapped up beaten-down shares, hopeful of better days ahead after three straight years of decline. The tech-laden Nasdaq Composite ended with a loss of 1.68 points, or 0.12 percent, at 1,446.04, after rising more than 1 percent early in the session. The blue-chip Dow Jones industrial average rose 1.09 points, or 0.01 percent, to 8,785.98, and the S&P 500 Index fell 1.3 points, or 0.14 percent, to 926.27.
- Crude oil prices fell after Mexico, the world's fourth-largest oil producer, said it will pump more oil next month to help make up for a world shortage, after a strike in Venezuela choked off exports. Mexico's state-owned oil company Petroleos Mexicanos will export 120,000 barrels of extra crude oil a day in February, the Energy Ministry said in statement yesterday. That follows a decision by OPEC at the weekend to raise output 1.5 million barrels a day to end a surge in oil prices after the six-week strike in Venezuela cut world supply by more than 2 million barrels a day.
- Rambus shares rose more than 4 percent after the company announced its quarterly earnings amid Monday's softening extended session. The tech-laden Nasdaq-100 After Hours Indicator, which tracks the evening action of the index's leading stocks, was very little changed. Earlier, the Nasdaq Composite closed down 2 points at 1,446 while the Dow Jones Industrial Average eked out a 1-point gain, finishing at 8,786
- Fundamental Backdrop:
The dollar may rise versus the yen on expectations a report will show U.S. retail sales had their biggest gain in 14 months in December.
- The U.S. currency may also climb against the yen on speculation Japan may sell its currency to stem an ascent that erodes earnings for exporters. Zembei Mizoguchi, who took over as vice finance minister for international affairs today, said swings in the currency are ``unfavorable.'' "A stronger yen will hurt the Japanese economy,'' Hiranuma told reporters at a press conference. "As a general principle, it is better for the yen to weaken rather than strengthen.''
- The Euro ignored some strong industrial data out of Germany yesterday. German production was up a surprising 2.5% in November (m-o-m), outpacing expectations of +0.3%. This is the strongest m-o-m gain since July 2000, and following sizable declines in September and October. Firmer equity performance outweighed the data and gave the greenback stronger bids. To add to the The British pound also fell from near a three-year high against the dollar on speculation U.K. consumers are curbing spending.
FX Technicals:
USD/JPY fell to 118.75 and could extend losses to 118.60 - 118.40 before revisiting the 119.80 - 120.00 area. However, longer-term considerations still remain negative. The major technical outlook is still dictated by the large Head and Shoulders formation after the rally from the 101.28 Nov. 1999 trough. The technical long-term outlook requires a test of the 115.00 neckline further out during 1Q2003.
EUR/USD was weighed down by firmer equity markets overnight, but no change in the general scenario. Resistance at 1.0600 area is still holding up, and becomes a fact if the pair falls below 1.0500. That will likely extend losses to as low as the 1.0350/40 area again. However, further ascent beyond 1.0620 may altogether remove the pullback risk. In any case, the main uptrend should reassert and resume strongly thereafter. Serious resistance may come only at circa 1.0800 - 1.0900 during 1Q2003.
GBP/USD fell to as low as 1.5990 nut has bounced back to 1.6040 since then. The outlook will probably worsen thereafter and will probably lead the sell-off towards the 1.5875 area. Only a break of 1.6100 hypothetical resistance from here lessens the odds of a large downwards pullback. The uptrend should resume in any case thereafter, and major resistance in the current trading cycle is expected only at 1.6400 - 1.6500. USD/CHF has gone to 1.3787, and now runs the risk of a rallyback to at least the 1.3950 area. Break above 1.3960 may in fact trigger a rally back all the way to 1.4080. Whichever scenario prevails, the downtrend should resume thereafter. The major downtrend target remains at 1.3400 - 1.3300 during 1Q2003.
USD/CAD bear trend has been to as low as 1.5390, lower than expected -- the positive scenario is probably gone -- the triangle scenario is gone. There could be a small rebound to 1.5450 from there, but further declines could bring the currency much lower, perhaps to 1.5250.
AUD/USD continues to gain territory and has been to as high as .5865, per expectations. The uptrend zeroes in at .5870/75 resistance -- and may be followed by a correction to .5780 area. The currency pair however stands a good chance of breaking through the cap. A significant break of .5870 resistance may boost the currency to .6000. NZD/USD has been to a.5420 as expected, and may extend gains to .5430/40 -- firm resistance area. Fair degree of resistance at those levels could precipitate a pull back to .5350 area. But break through the cap lays the foundation for further NZD/USD to rise towards .5600 - .5700.
Here are the news and events that are making impact on the foreign exchange markets as of the moment: (January 14, 2003)
- Japanese stocks rose as NTT DoCoMo Inc. headed for its biggest gain in six weeks after the country's biggest mobile-phone company more than doubled new subscribers last month. The Nikkei 225 Stock Average added 0.8 percent to 8540.92, ending a four-day, 2.8 percent drop, at the 11 a.m. break in Tokyo. The Topix index gained 0.8 percent to 844.68, with DoCoMo alone accounting for almost a third of its advance. Elsewhere in the region, Taiwan's TWSE Index rose 0.5 percent, paced by AU Optronics Corp. and Chi Mei Optoelectronics Corp., after Salomon Smith Barney Inc. raised its recommendations on the flat-panel display makers because shipments have started increasing.
- Technology shares dipped and blue chips ended up a touch on Monday, as investors paused for breath after an early January stock-buying spree and braced for a slew of key corporate earnings reports due later this week. The broad Standard & Poor's 500 index has risen more than 5 percent so far this year as bargain-hunting investors snapped up beaten-down shares, hopeful of better days ahead after three straight years of decline. The tech-laden Nasdaq Composite ended with a loss of 1.68 points, or 0.12 percent, at 1,446.04, after rising more than 1 percent early in the session. The blue-chip Dow Jones industrial average rose 1.09 points, or 0.01 percent, to 8,785.98, and the S&P 500 Index fell 1.3 points, or 0.14 percent, to 926.27.
- Crude oil prices fell after Mexico, the world's fourth-largest oil producer, said it will pump more oil next month to help make up for a world shortage, after a strike in Venezuela choked off exports. Mexico's state-owned oil company Petroleos Mexicanos will export 120,000 barrels of extra crude oil a day in February, the Energy Ministry said in statement yesterday. That follows a decision by OPEC at the weekend to raise output 1.5 million barrels a day to end a surge in oil prices after the six-week strike in Venezuela cut world supply by more than 2 million barrels a day.
- Rambus shares rose more than 4 percent after the company announced its quarterly earnings amid Monday's softening extended session. The tech-laden Nasdaq-100 After Hours Indicator, which tracks the evening action of the index's leading stocks, was very little changed. Earlier, the Nasdaq Composite closed down 2 points at 1,446 while the Dow Jones Industrial Average eked out a 1-point gain, finishing at 8,786