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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] USD Holds Firm vs EuroFX, =
But Wavers Against JPY January 31, 7:00 AM: EUR/$..0.8639 $/JPY..132.81 GB=
P/$..1.4143 $/CHF..1.7079 USD Holds Firm vs EuroFX, But Wavers Against JPY=
by Jes Black At 8:30:00 AM US Dec Personal Consumption (exp -0.1%, prev -=
0.7%) US Dec Personal Income (exp 0.2%, prev -0.1%) US Jobless Claims (exp =
375k, prev 376k) At 10:00:00 AM US Dec Help Wanted Index (exp n/f, prev 45)=
US Jan Chicago PMI (exp 48.5, prev 41.4) The yen fell in European trade a=
fter ratings agency Standard and Poor warned about the state of the Japanes=
e economy and raised the prospect of another sovereign downgrade. But the d=
ecline was short-lived after USD/JPY spiked to a day's high of 133.22 and t=
hen fell back to key support around 132.65 afterwards. EUR/USD also rose to=
a high of 114.88, but today's comments from S?were not enough to stem more=
corrective buying in JPY. S&P's announcement was the major news in today'=
s European session, but had little effect on the yen. Recently, an S?offici=
al described Japan's banking system as technically insolvent and the mark=
et now recognizes that Japan will have to do something about its problem lo=
an situation. The S?also said that Japan's economic stagnation has turned i=
nto a worrisome deflationary recession with no sign of upturn. And, further=
delay in structural reform or economic recovery will increase possibility =
of sovereign downgrade. USD/JPY fell after it failed for a second time in =
two days to break resistance at 133.20. This follows Monday's failed attemp=
t at 135.00 and the dollar is now looking to test trendline support from th=
e November low of 119.70 which currently lies around 132.55. The pair must =
maintain above this level to avoid further corrective losses in USD/JPY. Bu=
t this is unlikely if the pair moves sideways and a break of 132.50 would s=
ee a further move to 132.00 followed by 131.00. Key support stands at 129.1=
0, which marks the 38.2% retracement of the 119.70 to 134.95 move. Meanwhil=
e, the upside is capped at 133.20 and 133.60. JPY has benefited recently f=
rom a letup by Japanese officials chiming in unison about yen weakness. Ano=
ther point of contention this week will be whether the G7 meeting in Toront=
o and the World Economic Forum in New York become a sounding board for big =
global interests to bash the recent resurgence in the dollar against the ye=
n. Manufacturers, like GM on Wednesday, are likely to complain that the sta=
te of the economy is now about at the same level just prior to the Septembe=
r 11 attacks, but the USD/JPY is trading near 40-month highs. Meanwhile, t=
he dollar was steady against European majors and recouped some of yesterday=
's losses against the pound after the US Federal Reserve kept its key inter=
est rate unchanged at 1.75% and maintained its easing bias. The positive re=
sponse by Wall Street was supportive of the dollar, especially given the re=
cent Enron ripple effects felt on Tuesday's sell off of US equities. The do=
llar also rebounded sharply after US Q4 GDP rose 0.2% q/q, beating estimate=
s of a second consecutive negative quarter. This showed the US has avoided =
a technical recession and the Fed's supportive remarks were bullish for the=
dollar. EUR/USD held to a tight range of 86.00-86.40. The pair fell back =
to support at 86 cents after failing to hold onto gains above 86.30 overnig=
ht. But the single currency will need to regain the 86.80/90 mark to really=
improve its outlook. If not, it still looks vulnerable to fall back below =
86.00 on its way to this week's 6-month low of 85.72. A break below this wo=
uld then target 85.55, the 71.8% Fibonacci retracement of the move from 82.=
25 to 95.95. Resistance is viewed at 86.80, and the key 87.40/50 level whic=
h marks the 61.8% Fibonacci retracement of the same move. Today's much ant=
icipated German states' inflation came above expectations and is likely to =
prevent the European Central Bank from cutting interest rates soon, thereby=
weighing on the euro. German inflation surged upwards in January, but main=
ly because of tax increases and higher food prices rather than the impact o=
f the euro changeover, according to preliminary data from the individual st=
ates. Other data from the euro area was Italy's ISAE revision of 2002 GDP =
down to 1.5%. Meanwhile, the French jobless rate was steady at 9.0% in Dece=
mber compared with the previous month. Although the consensus was for a ris=
e to 9.1%, the figure suggests that the euro area's second largest economy =
is stabilizing after a sharp economic downturn. USD/CHF again tested resis=
tance at 1.7140, which marks the ascending trendline resistance. Swissy fel=
l back to a low of 1.7060 but remains well supported above 1.6945, the 50% =
retracement of the 1.8220 to 1.5770 move. Also keeping pressure on the fran=
ce was the Swiss KoF indicator which fell to -1.37 in December from -1.28, =
marking a worsening of conditions, not a turnaround as many had hoped. Ther=
efore, given the recent bullish data and positive outlook by the Fed, USD/C=
HF should remain well supported. GBP/USD moves were dictated by the rise a=
nd fall in EUR/GBP today from a low of 60.84 to a high of 61.24, or a 0.7% =
swing in European trade. The rise in EUR/GBP put sterling under pressure to=
a day's low of $1.4090, but the subsequent reversal in EUR/GBP allowed cab=
le to rise to a day's high of 1.4158. However, resistance at 1.4183, which =
marks the 38.2% Fibonacci retracement of the 1.4418-1.4038 move, has held s=
o far. Barring a break of this resistance, renewed weakness could prevail. =
Support is seen at 1.4120 and 1.4080. The sharp moves in sterling reflect =
a recently released poll from investment bank Credit Suisse First Boston wh=
ich shows only a very small majority of Britons opposes joining Europe's si=
ngle currency in the next two to three years. In contrast to a 70% oppositi=
on last year, the poll now showed 42% of those asked would support euro ent=
ry within the next two to three years while 46% were opposed. The other da=
ta from the UK today showed a sharp rise in British consumer confidence in =
January to +6 from -1. This reflected yesterday's data showing net consumer=
credit rose more than expected in December to 2.166 billion pounds compare=
d with a rise of 1.5 billion pounds in November. Despite recent data and re=
ports on the UK economy which have highlighted disparities between manufact=
uring and consumption, the increase in consumer credit was seen as adding t=
o consumption which has kept the economy afloat with robust growth. But the=
y also reinforce the perception that the Bank of England will be reluctant =
to cut interest rates again any time soon. Today's data from the US includ=
es the release of Chicago PMI, which is forecasted to rise to 45.5 in Janua=
ry from the previous 41.4, mirroring the improvement seen in the ISM (forme=
rly NAPM) survey. The pickup in the manufacturing sector is attributable to=
increased spending on durables and other goods, and therefore, US Personal=
consumption is expected to rise to 0.1% in December from the previous 0.7%=
. Personal income is also assumed to post a gain of 0.3% in December from t=
he previous 0.1%, even though the Employment cost index is projected to hol=
d steady at 1.0% in Q4. Markets will again focus on Wall Street for direct=
ion and today's earnings announcements include AFLAC, Alcatel, Alliance Cap=
ital Management, Barnes & Noble.com, Delta Air Lines, Dole Food, Dow Chemic=
al, KPMG Consulting and Walt Disney. =09[IMAGE] Audio Mkt. Analysis Positi=
ve GDP, Positive Fed Help Dollar Articles & Ideas Fed Moves On, Doll=
ar Moves Up How Will the Dollar Fare Amid the Data Barrage? Article=
s & Ideas Forex Glossary Economic Indicators Forex Guides Link Librar=
y [IMAGE] =09
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