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[IMAGE] Forums Discuss these points in the Forums: Forexnews Forum T= 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: 2.0% 0.15% 3.2= 5% 4.0% 1.75-2.75% [IMAGE] =09 [IMAGE] Dollar Regains Momentum as = Confidence in US Outlook Rises November 19, 7:00 AM: EUR/$..0.8793 $/JPY..= 123.38 GBP/$..1.4211 $/CHF..1.6660 Dollar Regains Momentum as Confidence i= n US Outlook Rises by Jes Black At 8:30:00 AM US Oct Housing Permits (exp = 1.510 mln, prev 1.524 mln) US Oct Housing Starts (exp 1.520 mln, prev 1.574= mln) The dollar added to earlier gains and soared to fresh 3-month high o= f 123.49 yen and a 3-1/2 week high of $1.4213 against the pound in European= trade as markets anticipated renewed enthusiasm for a V-shaped recovery in= the US. After falling to profit taking on Friday, following the largest dr= op in US industrial production in 11 years to -1.1%, the dollar regained it= s momentum as investors showed they still prefer the future outlook for USD= over other major currencies. The dollar index is now at highs last seen in= August, at 116.89, which put the euro under pressure at a day's low of $0.= 8789. EUR/USD peaked around 88.60 on Friday, but was unable to hold onto = gains above 88.40, which led the pair back towards the 88-cent level on Mon= day. Last week, the euro flirted with 88 cents, but maintained above key re= sistance around 87.45. The Bundesbank November monthly report indicated as = expected that Q3 growth was flat for the Eurozone's number one economy. Fla= t growth in Q2 also contributed to a year on year growth rate of around 0.2= 5%, down from 0.6% in Q2, thus showing that Germany is very close to a tech= nical recession. EUR/USD edged back below 88 cents, but did not trigger sto= p loss orders and held to a day's low of 87.89. Traders anticipate Wednesd= ay's release of Germany's Ifo business climate index (an estimate of German= growth, which accounts for about one-third of the Eurozone) to recover sli= ghtly in November to 86 after plunging to 85 in October from 89.5. Markets = also await Eurozone industrial production figures for September, which like= ly dropped since French and Italian outputs declined. Disappointing results= will most likely spark renewed selling in the euro. Support is seen at the= 88-cent figure, backed by 87.70 and 87.45. Resistance is seen at 89.0, 89.= 30 and 89.50. USD/JPY rose to a new 3-1/2 week high of 123.49, following a= nother grim assessment of the Japanese economy by the Bank of Japan in its = November report. "Adjustments in economic activity are becoming severe, as = the substantial decline in production is beginning to have an adverse effec= t on private consumption through decreases in employment and income," the B= oJ said in the monthly report. This was the sixth straight month the Bank c= ited weakening private consumption and falling corporate profits at banks a= nd the deterioration in the manufacturing sector will add weakness to domes= tic demand, it said. Following another downgrade in Japan's economic outl= ook, it now appears that FY02 tax revenue will probably be revised down by = Y2.8 trln from Y49.6 trln, according to the MoF. Therefore, sticking to PM = Koizumi's important reform to limit JGB issuance to 30 trillion yen in FY02= will be difficult. In order to achieve this, further expenditure cuts will= be needed, which will likely find strong opposition within Koizumi's own L= DP party. Japanese FinMin Shiokawa maintained that the government would lim= it new issuance to Y30 trln, but more LDP lawmakers are now openly requesti= ng further fiscal stimulus. Aggravating the situation is that tax projectio= n for FY02 is most likely to be revised down further. Adding pressure to t= he yen is the fact that the BoJ decided by majority vote to keep monetary p= olicy unchanged last week. It had eased in August and again in September bu= t has since been keeping a wait-and-see stance. Interest rates are still ne= ar zero and its liquidity supply in the money market exceeds its stated tar= get of 6 trillion yen. Moreover, another possible move by the BoJ would be = to purchase more foreign bonds, which would lead to a substantial fall in t= he yen. Rumor of selling interest in USD/JPY by exporters around 123.20 c= apping gains. Technical resistance around 123.35 also limiting upside poten= tial. Meanwhile, with little room for improvement in the Japanese economy u= ntil late next year, most market watchers see the yen heading for 125 now t= hat it has successfully breached the 123 mark. Resistance is seen around 12= 3.35/45. But USD/JPY support is expected to hold at 121.95/122.00 followed = by 121.40/50, with any pullback towards the latter level seen as a buying o= pportunity, dealers said. EUR/GBP rose to a fresh high of 62.05 but is exp= ected to stay rangebound at around 61-62 pence after recovering from recent= 10-week lows around 60 pence. When that cross is steady, GBP/USD shadows t= he movements in the more dominant EUR/USD. So far, cable has fallen to a ne= w one-month low of 1.4210 as it continues to suffer further declines since = last Wednesday's inflation report by the Bank of England signaled a shift i= n market sentiment. The market is now more aware of the weaknesses the UK f= aces due to the internal and external imbalances in the economy. BoE's King= pointed out that those imbalances might lead to a weaker pound. Moreover, = the Bank appears more concerned about future inflationary pressures given t= hat interest rates are now at a 40-year low. Therefore, interest rates are = likely to be left on hold just as the labor market is showing its first sig= ns of weakness, which will weigh on the pound. Major support now stands at = 1.4195 after GBP fell below key levels of 1.4250 and 1.4230. Meanwhile, US= D/CHF rose to a session high around 1.6673 after falling to a low of 1.6536= on Friday. Helping the dollar were comments from Swiss National Bank Chair= man Jean-Pierre Roth who said the outlook for the U.S. economy is uncertain= but could improve if the war in Afghanistan ended. "The uncertainty is cur= rently unusually great. But there is a certain chance now that the developm= ents could come out better than feared. If and when it is true that the war= in Afghanistan is over, that could give some important psychological impet= us," he said. "Switzerland is so dependent on world trade that of course we= cannot escape from developments abroad," he said. Moreover, the SNB aimed = to conduct monetary policy "so that our interest rates are as low as possib= le in order to provide relief for the economy, but so that at the same time= , we do not endanger price stability," he added. Inflation in Switzerland i= s below one percent. On Friday, Roth said in an interview with the Financi= al Times that the Swiss franc's role as a safe-haven currency is declining = because of the emergence of the euro. Thus Roth felt more at ease that the = Swiss franc is reverting to the status of a normal currency as it becomes "= less important as a financial asset". The Swiss National Bank has been dism= ayed by the appreciation in the Swiss franc as investors sought shelter ami= dst recent political uncertainty, thereby prompting the central bank to cut= rates. Roth asserted that "if we were to face large capital inflows we wou= ld have to respond through monetary policy and interest rates" because "it = is an illusion to think that we have other instruments that we could use to= curb inflows". Upside capped at 1.6680 and 1.670. Support holds at 1.6535,= 1.650 and 1.6480. Today's US data is expected to show a decline in housin= g starts as the slowdown in the general economy starts to outweigh the bene= fits of record low mortgage rates. However, USD strength continues to stem = from the belief that the US-backed war in Afghanistan is going better than = anticipated and this is translating into a fall in uncertainty and a rise i= n confidence. Accordingly, dealers anticipate further gains on Wall Street = this week, which is adding to the dollar's buoyancy. =09[IMAGE] Audio Mkt= . Analysis Further Losses for GBP, EUR Steadies Articles & Ideas OPE= C: The beginning of a price war? Dollar Regains key Pre-Sept 11 levels = Articles & Ideas Forex Glossary Economic Indicators Forex Guides = Link Library [IMAGE] =09 =09=09[IMAGE][IMAGE] [IMAGE][IMAGE]=09 =09=09 This e-mail is never sent unsolicited. If you wish to unsubscribe f= rom this or any other Forexnews.com newsletters, please click here . =09
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