US Trading Preview

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echnicals Live Charts Analysis available from: Cornelius Luca J.P. Chorek=
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Interest Rates US: Japan: Eurozone: UK: Switzerland: 1.75% 0.15% 3.=
25% 4.0% 1.25-2.25% [IMAGE] =09 [IMAGE] USD Quiet Ahead of Key Q4 =
Productivity Data February 6, 7:00 AM: EUR/$..0.8675 $/JPY..133.41 GBP/$..=
1.4148 $/CHF..1.6955 USD Quiet Ahead of Key Q4 Productivity Data by Jes Bl=
ack At 8:30:00 AM US Q4 Unit Labor costs prel (exp 2.2%, prev 2.3%) US Q4 =
Productivity prel (exp 2.9%, prev 1.5%) There was little action in the for=
eign exchange market on Wednesday ahead of today's key US productivity data=
for the fourth quarter due at 8:30 AM. Consensus forecasts have been revis=
ed higher this week as confidence in the US productivity miracle grew. Th=
e currenct estimate is for Q4 productivity to rise 2.9% from the 1.5% gain =
in Q3 of last year. That is close to the average annual rate of 3.07% per =
annum from 1995-2002 estimated by White House economists in the Bush admini=
stration's first annual Economic Report of the President, released on Wedne=
sday. The productivity figure is key to the dollar because its strong perf=
ormance against other currencies is a reflection of higher productivity gro=
wth than other industrialized nations. This also explains why the US is a n=
et beneficiary of capital flows as investors believe that productivity grow=
th in the US will be a better investment. The dollar was little changed ag=
ainst the euro from its US close after a sharp rebound on Tuesday allowed i=
t to recover most of this week's losses. The euro held onto half of Monday'=
s gains after a large rise against the yen helped it back above the psychol=
ogical 87-cent mark. However, that brief rally soon ran out of steam and EU=
R/USD is now trading in a range of 86.50 to 86.80. Failure to regain resis=
tance at 86.80 is seen calling upon support at 86.35 and 86.00, before anot=
her attempt at 86.60. Resistance is seen at 87.10, which marks the 38.2% re=
tracement of the .8953-.8560 move. A rise above that level would target the=
key 87.50 mark and a breach of this level would be bullish for the EUR/USD=
. However, only a move above past resistance at 88.60 would really damage t=
he bear trend. The euro was unchanged by data showing unemployment in Germ=
any rose sharply in January, sending the jobless total above 4m. The season=
ally unadjusted number of unemployed soared to 4.29m from 3.96m in December=
, carrying the unemployment rate to 10.4% from 9.6%. German Labor office's =
Jagoda says economic weakness continues to impact on labor market and as lo=
ng as weakness persists he cannot rule out a marginal rise in unemployment =
next month as well. The data is likely to give Chancellor Gerhard Schroder'=
s centre-left government trouble as it is restrained from doing much due to=
the fiscal restraints of the Masstricht treaty. Meanwhile, all eyes are o=
n this week's central bank meetings from the Eurozone, UK and Japan. Both t=
he ECB and BoE are expected to hold rates unchanged, but given the resurgin=
g pessimism surrounding the Japanese economy, there is a chance the Bank of=
Japan will take additional easing steps to stop the deflationary trend tha=
t menaces the economy. In order to curb the sharp rise in Japanese Governm=
ent Bonds, the Bank of Japan might surprise markets and increase the outrig=
ht purchases of JGBs at Friday's policy meeting. Currently they purchase 80=
0 billion worth of JGBs per month and may decide to increase this by 10-25%=
to around 1 trillion in an effort to increase liquidity and stabilize bond=
yields. The move would likely weaken the yen. However, the yen has found =
support from Japan's top financial diplomat, Kuroda, who said that rapid fo=
reign exchange movements are undesirable and that he saw no risk of further=
yen weakness, thereby hinting to dealers that Japan was comfortable with a=
range of 130-135, for now. USD/JPY broke below support at 133.60 after fa=
iling to break 134.20 earlier. The pair fell to a session low of 133.38. Su=
pport is seen at 132.80 and this week's low of 131.90. Resistance is seen a=
t 134.40 and 135.20. GBP/USD fell to a day's low of 1.4125, near yesterday=
's support at 1.4115 after peaking at a 1-week high of 1.4247 in European t=
rade on Tuesday. A break below 1.4110 would call upon key support at 1.4180=
, which marks the 38.2% retracement of the 1.4418-1.4038 move. Follow up su=
pport is seen at last week's 6-month lows of 1.4045. Upside capped at 1.423=
5, 1.4270 and 1.4300. Sterling was supported by data showing the average v=
alue of a UK house has risen above 100,000 GBP for the first time following=
another strong price increase in January. The rise in home prices is likel=
y to be a boost to consumer confidence and spending in the UK. The dollar =
will continue to follow moves on Wall Street after another down day on Tues=
day highlighted investors' concerns as the mood again turned to cautious fo=
r the US. With the economic rebound already priced into the dollar at last =
week's highs, Monday's US equity sell-off was all it took to bring about a =
strong correction in USD from its recent six-month highs against the euro a=
nd three-year highs against the yen. Today's earnings reports will focus o=
n such key companies as Anheuser-Busch, Cisco Systems, Metro-Goldwyn-Mayer,=
and Pepsico. =09[IMAGE] Audio Mkt. Analysis Yen Crushed Amid Nikkei Slide=
Articles & Ideas Dollar Does Davos In New York USD/JPY: ONeill, K=
oizumi and January Effect Articles & Ideas Forex Glossary Economic =
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