US Trading Preview

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echnicals Live Charts Analysis available from: Cornelius Luca J.P. Chorek=
Technical Research Ltd. Charts & News featuring Standard & Poor's =
Interest Rates US: Japan: Eurozone: UK: Switzerland: 1.75% 0.15% 3.=
25% 4.0% 1.25-2.25% [IMAGE] =09 [IMAGE] Markets Eye Earnings Af=
ter Greenspan Effect Weighs on USD January 14, 7:00 AM: EUR/$..0.8930 $/JPY=
..131.66 GBP/$..1.4494 $/CHF..1.6554 Markets Eye Earnings After Greenspan =
Effect Weighs on USD by Jes Black No Key Data. Event New York Fed Pres McD=
onough to speak at 1:15 PM, Minneapolis Fed Pres Stern to speak at 4:00 PM.=
USD started the week lower across the board following the Asian markets r=
eaction to last Friday's comments by Fed Chairman Greenspan, where he point=
ed out that the optimistic view of economy has not yet been reflected in th=
e real fundamentals. Therefore, markets are wondering whether earnings warn=
ings this week will depress Wall Street after US equities ended a down week=
on a down note on Friday. Signals from Greenspan is that it's no shoe in t=
hat the economy will come out of the slowdown and return to fast growth als=
o mean that markets will look to this week's US data for hints as to the Fe=
d's next move at its monetary policy meeting on January 30. EUR/USD rose t=
o a day's high of 89.53 before paring gains in European trade to a day's lo=
w of 89.22. Weakness against the pound and yen weighed on the EUR/USD rate =
as the single currency tested support at 61.50 pence and 117.35 yen. The e=
uro barely held above last Friday's low of 117.25 and failure to hold above=
117.50 could be a bearish sign for the euro, especially since much of the =
euro's recent strength against the dollar has been derived from its strong =
gains against the yen. However, further weakness is not seen unless EUR/USD=
falls below support at 89.10. EUR/USD continues to move within a channel =
from 88.70 to 89.50 as it hovers around the key 89.10 level, which marks th=
e 50% Fibonacci retracement of the move from 82.25 to 95.96. This level is =
significant in that it reflects an equilibrium in supply and demand conditi=
on between euro and dollar. Today, the pair briefly tested resistance at 89=
.50, but was rejected. Moves higher are not seen by the market as indicatin=
g strength given the euro's difficulty to remain above 90-cents. Given the=
mixed data from the Euro area and the US, investors are seen waiting on th=
e sidelines ahead of the latest round of earnings reports from the US for b=
etter direction. Dealers will watch to see if U.S. markets are getting ahea=
d of themselves in anticipating a U.S. recovery, meaning that share prices =
may be overvalued. Until we see corporate earnings improving, share prices =
aren't likely to rise. Moreover, companies are likely to put all their bad =
news into Q4 reports for a clean slate in 2002, stock analyst say. On Frid=
ay, Greenspan said a key feature of the recent downturn was a lack of busin=
ess investment. He said that when it does recover, spending will not resume=
at breakneck speed. Instead, the present cycle will be driven by a return =
of corporate profits and capital investment. But those levels aren't expect=
ed to reach the levels it did in 1999 and early 2000 when companies were pr=
eparing for the Y2K date change and spending large amounts of money on IT i=
nvestment. This chimed with Richmond Fed president Broaddus who said last w=
eek "there's a good chance that the US economy may be at least a little sof=
ter than the consensus" expectations and predicted "a more gradual recovery=
from the recession than in most other post-war business cycles. Although=
a restrained economic assessment by Greenspan initially weighed on the dol=
lar, markets may interpret it as slowing the recovery in the euro area as w=
ell, which would weigh on the euro. Sterling rose to a day's high of $1.45=
05 continued to trade near a day's high of 61.55 pence despite November ind=
ustrial production, which fell more than expected at -0.7% m/m and -5.4% y/=
y. The manufacturing numbers were disappointing , but not surprising given =
the attention paid to the UK's "two speed" economy which BoE officials have=
spoken of in the past. The data confirms the recessionary state of the sec=
tor. GBP was supported by weekend comments from PM Blair concerning EMU e=
ntry. Blair's cautionary remark that there must be an examination of the ec=
onomic benefits of joining the euro before his government could recommend m=
embership helped push EUR/GBP to a low of 61.55. GBP is now close to its 20=
01 opening level around 61 pence after falling as far as 62.80 at the start=
of the year. GBP/USD resistance is seen at 1.450 and 1.4550. Support holds=
at 1.4370, 1.4340 and 1.4320. =09[IMAGE] Audio Mkt. Analysis BoE inact=
ion Lifts GBP, Comments Hurt CHF Articles & Ideas Greenspan Widens =
Door for One More, But... A Weak Yen Is the Solution for Now Artic=
les & Ideas Forex Glossary Economic Indicators Forex Guides Link Libr=
ary [IMAGE] =09
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