After hitting a new record high at 1.4120 versus the
dollar, the euro edged lower versus the dollar on
weaker-than-expected manufacturing and services PMI reports
from the euro zone.
The Euro zone services PMI fell from 58 to 54 in September,
below the estimate of 57.5. The manufacturing PMI dropped
from 54.3 to 53.2, weaker than the expectation of 53.9.
Euro zone current account balance shrank from 11.4 billion
euros to 3.3 billion euros in July. The main reason behind
the weak figures is the recent global financial market
turbulence beginning from August.
The dollar remains under pressure after the Fed cut half a
percentage-point this Tuesday. Fed Chairman Ben Bernanke
yesterday said credit market turmoil may make the housing
recession more severe, adding to the worries over the
nation's economy. Interest-rate futures indicated traders
bet a 70 percent chance of a quarter-percentage point cut
to 4.50% at the Fed's policy meeting on October 31.
The Fed's aggressive move lifted investors risk appetite
and carry trades increased modestly. That is why the dollar
weakened against most of its rivals except the yen after
the rate cut.
Besides, the sterling has been recovering from subprime
crisis concern sparked by the Bank of England bailing out
the nation's fourth biggest home mortgage lender Northern
Rock. The currency on Friday strengthened to around 2.02
versus the dollar.
CAD Hit 31-yr High 0.9940 vs Dollar
The Canadian dollar touched a 31-year-high at 0.9940 versus
the dollar and it gave back some of its gains after a
government report showed retail sales fell unexpectedly for
a second month. Canada retail sales are expected to remain
unchanged in July, after a 0.9% drop in June. Excluding
food and energy, core retail sales may rose 0.3% versus a
0.3% decline in the previous month.
EURUSD will face interim resistance at 1.41, followed by
1.4120 and 1.4150. Additional ceilings will emerge at
1.4180, backed by 1.42. Support starts at 1.4050, backed by
1.40, 1.3980 and 1.3950. Subsequent floors are eyed at 1.39.
USDJPY encounters interim resistance at 115.80, backed by
116 and 116.30. Subsequent ceilings will emerge at 116.50,
followed by 116.80 and 117. On the downside, support begins
at 115.30 and 115, followed by 114.70. Additional floors
are eyed at 114.30, backed by 114 and 113.70.
GBPUSD encounters interim resistance at 2.02, backed by
2.0220 and 2.0250. Subsequent ceilings will emerge at
2.0270, followed by 2.03 and 2.0320. On the downside,
support begins at 2.0170, followed by 2.0150 and 2.0120.
Additional floors are eyed at 2.01, backed by 2.0080 and
2.0050.
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