Dollar fell to record low against Euro on persistent US financial sector worries.

Dollar fell to record low against Euro on persistent US financial sector worries.


The Dollar fell to a record low against the Euro on Tuesday amid persistent fears over the health of the US financial institutions. But crude Oil 4.43% drop to 138.74 briefly diverted investors' attention away from the troubles in the financial sector, helping the Dollar to pull back from the historic troughs and regain some ground versus the Yen. Bernanke told the Senate Banking Committee that financial markets and institutions remained under "considerable stress" and restoring stability was a top priority for the central bank. AudUsd hit a 25-year high of 0.9851 after minutes of the Reserve Bank of Australia's July meeting showed the central bank remained concerned about inflation. The Bank of Canada left its benchmark rate unchanged at 3%.
News and Events:


The Dollar fell to a record low against the Euro on Tuesday amid persistent fears over the health of the US financial institutions. But crude Oil 4.43% drop to 138.74 briefly diverted investors' attention away from the troubles in the financial sector, helping the Dollar to pull back from the historic troughs and regain some ground versus the Yen.

Bernanke told the Senate Banking Committee that financial markets and institutions remained under "considerable stress" and restoring stability was a top priority for the central bank. Separately, US Treasury Secretary Henry Paulson testified before the committee that distressed housing finance giants Freddie Mac and Fannie Mae had potential to pose systemic risks to the financial system.

EurUsd jumped to a record peak of 1.6039. The dollar got a brief boost from a surge in Wall Street stocks as Oil dropped as much as $6.44 a barrel on speculation sluggish US economic growth could curtail demand. But renewed financial worries took the steam out of the US stock market rally as the Dow Jones industrials ended below 11,000 for the first time since July 2006.

Sagging global stock markets sent investors toward the safe-haven Japanese Yen. UsdJpy fell as low as 104.16. It last traded at 104.76, down 1.37%. EurJpy fell 1.22% to 166.75. EurUsd ended up 0.14% to 1.5917. UsdChf was 0.79% lower at 1.0091. GbpUsd rose 0.54% to 2.0056 after hitting 2.0158 high. Elsewhere, AudUsd hit a 25-year high of 0.9851 after minutes of the Reserve Bank of Australia's July meeting showed the central bank remained concerned about inflation. This suggested it will likely keep rates at a 12-year high and may even hike again. UsdCad fell below parity for the first time in 1-1/2 months, 0.9975 low. It last traded at 1.0016 down 0.53% after the Bank of Canada left its benchmark rate unchanged at 3%.



Today's Key Issues (time in GMT):


07:15 CHF May Retail Sales 2.5% vs 2.4%
08:30 GBP May Average earnings 3mth 3.7% vs 3.8% (YoY)
08:30 GBP June Claimant count unemployment change 10k vs 9k
08:30 GBP May ILO unemployment rate 5.3% vs 5.3%
09:00 EUR June Euro-zone Inflation ex-food & energy 0.2% vs 0.2% (MoM)
09:00 EUR June Euro-zone Inflation ex-food & energy 2.6% vs 2.5% (YoY)
09:00 EUR June Euro-zone Inflation final 0.4% vs 0.6% (MoM)
09:00 EUR June Euro-zone Inflation final 4% vs 3.7% (YoY)
12:30 USD June CPI ex-food/energy 0.2% vs 0.2% (MoM)
12:30 USD June CPI inflation 0.7% vs 0.6% (MoM)
12:30 USD June CPI ex-food/energy 2.3% vs 2.3% (YoY)
12:30 USD June CPI inflation 4.5% vs 4.2% (YoY)
12:30 USD June Real weekly earnings -0.3% vs -0.4%
13:00 CAD May Manufacturing sales 0.5% vs 2%
13:00 USD May Net L-T flows $85B vs $115.1B
13:15 USD June Capacity utilization 79.3% vs 79.4%
13:15 USD June Industrial output 0% vs -0.2% (MoM)
17:00 USD July NAHB housing market index 18 vs 18
The Risk Today:

EurUsd:
Market hit 1.6039 yesterday high. This marks initial resistance over 1.6000 Pivot point resistance. A break there would open the way to key resistance 1.6200. On the downtrend, return below 1.5800 will undermine the recent uptrend. Any may bring back 1.5400 – 1.5800 consolidation range. Below, strong support holds 1.5304 13th June low.


GbpUsd:
Cable is getting over trading range 1.9400 – 2.0000. It hit 2.0158 yesterday high. Key level holds 2.0100. On the downside, only a return below 1.9649 might bring again focus on 1.9337 January low and 1.9105 (50% retracement of 1.7049 – 2.1162 advance). Initial support holds 1.9649 July 7th low. Strong support holds 1.9363 20th February and 14th May low.


UsdJpy:
Last 3-month up-trend has been ended as market broke down 105 level. Further profit taking would push the market into 100 – 104 consolidation trading range and toward 100 level. Renewed advance over 105 would put mid-June 108.59 resistance and 110.10 strong resistance (Trendline) into focus ahead of 111.92 early January high.


UsdChf:
Market hit 1.0013 low yesterday. Further weakness below 1.0000 may open the way toward 0.9637 17th March low. Renewed strength over 1.0200 would reopen the 1.0200 – 1.0600 consolidation range. Initial resistance holds 1.0353 9th July high.



Resistance and Support:



By
Jean-Claude Braha
- ACM Advanced Currency Markets, Geneva, Switzerland

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Provided by ACM: http://www.ac-markets.com