Stock markets decline, US Dollar rises. US markets closed today.

The US dollar gained some ground in early trading this morning after the S&P500 lost 0.6% on Friday. The Nikkei dropped 3.9% on slowing exports as Japan has to cope with a slowing global economic outlook. The US markets are closed today in observance of Martin Luther King Jr holiday.


News and Events:
The US dollar gained some ground in early trading this morning after the S&P500 lost 0.6% on Friday. The University of Michigan consumer sentiment index for January came out at 80.5, better than in December at 75.5. President Bush outlined a fiscal stimulus package that includes income tax breaks across the board for individuals and businesses. The Fed continues to eye the downside risks to economic growth and has reiterated that it will take action when necessary to counter any slowdown. The US markets are closed today in observance of Martin Luther King Jr holiday.

The Nikkei dropped 3.9% on slowing exports as Japan has to cope with a slowing global economic outlook. The Bank of Japan is expected to keep interest rates steady at 0.5%. The Yen continues to strengthen against the dollar, trading as strong as 106.10 in early trading.




Today's Key Issues (time in GMT):

09:30 GBP Public Finances (DEC) £14.1B vs £8.9B
09:30 GBP Public Sector Net Borrowing (DEC) £7.1B vs £11.2B
09:30 GBP M4 Money Supply (MoM) (DEC P) 0.4% vs 0.5%
09:30 GBP M4 Money Supply (YoY) (DEC P) 11.0% vs 11.7%
09:30 GBP M4 Sterling Lending (BP) (DEC P) £14.5B vs £16.5B
09:30 GBP BSA Mortgage Approvals s.a. (DEC) £4533M

13:30 CAD Wholesale Sales (MoM) (NOV) 0.3% vs 0.5%



The Risk Today:

EurUsd has broken out of its uptrend, trading below the trend-line support and hovering above a key support at 1.4525. A close and follow-through below this level would be bearish and open the door to 1.4300. On the upside, the pair remains bullish above 1.4650.

GbpUsd continues downwards in its channel and very bearish below 1.9765. Next target is 1.9186. Resistance holds at 1.9765, which if passed, the pair will eye 2.0137.

UsdJpy is holding firm at strong support at 106.50. On the downside, the target is 104.22. Only a move above 111.50 will initiate any real buying.

UsdChf ranging between 1.0845 and 1.1114. A break of the resistance will move the pair to 1.1290 while on the downside, the next clear target would be parity at 1.0000. The pair has not traded below 1.0845 in the past 30 years.


Resistance and Support:




By James Brandt - ACM Advanced Currency Markets, Geneva, Switzerland