(MENAFN- Advanced Currecy Markets [ACM]) The Dollar fell near an all-time low against the Euro on Thursday as investors debated the size of an expected Federal Reserve interest rate cut next week after soft economic data pointed to sluggish growth. Declining US stocks, used by investors as a barometer of risk aversion, also pushed the Dollar lower versus the Yen.
Forex analysts said the unexpected fall in orders for long-lasting manufactured goods, the latest in a raft of weak economic reports this month, had sealed the case for further monetary easing at the Fed's Oct. 30-31 policy meeting. Such a step, coming after last month's 50bp reduction in the Fed funds rate target to 4.75%, would further diminish the demand of Dollar-denominated assets and undermine the struggling US currency. US interest rate futures fully reflect a 25bp cut in the Fed's benchmark lending rate, while the chances for a 50bp reduction are around 55%.
Yesterday, EurUsd was up 0.43% at 1.4323, edging closer to the record peak of 1.4349 hit on Monday. It climbed as high as 1.4344 in European session, helped by the drop in US durable goods orders. EurJpy went up 0.49% to 163.42 while GbpJpy was up 0.16% to 234.04 after touching 235.14 high. The UsdJpy last traded unchanged at 114.09, off intraday high of 114.57. High-yielding currencies such as the Australian and New Zealand Dollars gained despite lingering risk aversion as investors focused on prospects of higher interest rates to curb inflationary pressures in those two countries. The NzdUsd traded 0.99% higher at 0.7616, while the AudUsd firmed 0.7% to 0.9083. The US Dollar fell 0.33% versus the Canadian Dollar to 0.9663.
Oil price rose to a fresh all-time high above $92 a barrel and Gold hit a fresh 28-year peak of 778.25 an ounce.
Today Key Issues (time in GMT):
08:00 EUR Oct Euro zone Money-M3 annual growth 11.4% vs 11.6%
14:00 USD Oct University of Michigan Confidence 82 vs 83.4
14:00 USD Oct University of Michigan Conditions 98 vs 97.9
14:00 USD Oct University of Michigan Expectations 72 vs 74.1
15:00 CAD August Budget Balance C$ 1.41B
15:00 CAD August Budget Year to date C$ 7.77B
The Risk today:
EurUsd hit new high 1.4374 this morning. Last week break up 1.4280 opened the way through Next resistance 1.4400. On the downside, a return below 1.4280 former resistance and break down 1.4165 support may open the way down to 1.4000 nearby support and 1.3927 where a lower development would threaten the up-trend. On a long term view, it would need a return below 1.3719 to confirm trend change. Initial support holds 1.4165.
GbpUsd hit earlier a new 3-month 2.0568 high. Initial resistance 2.0500 has been broke and open the way to 2.0574 resistance and 2.0654 key resistance. On the downside, it would need renewed pressure below 2.0200 and further weakness toward 2.0000 psychological level and 1.9880 support to confirm trend change. Beyond that point, 1.9821 marks strong support (76.4% retracement of 1.9652 to 2.0366 advance). Initial support holds 2.0500 former resistance.
UsdJpy looks negative following Monday 113.26 low test. Further drop might follow toward 112.61 and retest of ultimate 111.60 (August 17 low). On the upside, it still need a confirmation over 117.63 resistance to open the way for further extend toward 119.06 (61.8% retracement of 123.67 to 111.60 decline). Key support holds 114.
UsdChf dropped down to 1.1602 on Monday. Initial resistance holds 1.1790 (23.6% retracement of 1.2477 to 1.1577 decline) and strong resistance 1.1923 (38.2%). However, recent downtrend development below 1.1680 key level may reopen the way toward 1.1500 psychological support and possibly 1.1484 (2005 March 14 low).
Short version:
The Dollar fell near an all-time low against the Euro on Thursday as investors debated the size of an expected Federal Reserve interest rate cut next week after soft economic data pointed to sluggish growth. Declining US stocks, used by investors as a barometer of risk aversion, also pushed the Dollar lower versus the Yen.
US interest rate futures fully reflect a 25bp cut in the Fed's benchmark lending rate, while the chances for a 50bp reduction are around 55%.
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