3 August 2001, 18:28  US FX Daily Outlook: Dollar higher ahead of the US jobs report (part 1)

By Cornelius Luca //
New York, August 3 (BridgeNews) - The U.S. dollar edged higher ahead of the release of the U.S. jobs report, which might provide a better idea whether the Federal Reserve will cut rates by 25 or 50 basis points at this month's FOMC meeting. The greenback might also take its cues from the domestic stock markets, which have shown signs of rebound this week.

Dollar/yen rebounded from a four-day low of 123.50, euro/dollar slipped within Thursday's range, sterling/dollar fell to a two-day low of 1.4280, dollar/Swiss franc rose within the previous day's range, while dollar/Canada rose from a three-day low of 1.5328.
The market will focus Friday on the U.S. labor market July report, which is expected to show a further ease amid ongoing layoffs and job cuts. The domestic economic agenda also includes a speech by Federal Reserve Bank of Dallas President Robert McTeer.

Current Previous Change Global Global
NY open NY close low high

USD/JPY 123.83 123.67 0.16 123.50 124.02
EUR/USD 0.8803 0.8840 -0.0037 0.8800 0.8841
EUR/JPY 109.01 109.28 -0.27 108.93 109.49
GBP/USD 1.4290 1.4314 -0.0024 1.4280 1.4318
USD/CHF 1.7121 1.7098 0.0023 1.7085 1.7136
USD/CAD 1.5340 1.5334 0.0006 1.5328 1.5366
AUD/USD 0.5167 0.5202 -0.0035 0.5150 0.5207

USD/JPY rose on profit taking from a 4-day low of 123.50, which is the downside target of the 124.00 Gann 50-point pivot, but remained again within Monday's range.
The market ignored remarks by Bank of Japan Governor Masaru Hayami who said he believes the current level of the yen is not too strong and said the market can decide and judge the FX levels.
In other news, the Japanese Finance Ministry and the Council on Economic and Fiscal Reform, which are discussing budgetary request guidelines, are considering cutting fiscal 2001-02 general expenditure by about 700 billion yen to around 48 trillion yen, the Nihon Keizai Shimbun reported. This would be the first time in 4 years that the guidelines have requested a reduction in spending, the business daily said.
The outlook is mixed, with the downside protected by 123.50 and the upside by the 20-day moving average at 124.30.

Support: 123.50 (overnight low), 123.07 (60-day moving average), 122.70 (July 20 trough), 122.50 (Gann 50-point pivot; targets: 122.00/123.00), 121.05 (Gann 50-point pivot; targets: 120.55/121.55).
Resistance: 124.00 (Gann 50-point pivot; targets: 123.50/124.50), 124.02 (overnight high), 124.30 (20-day moving average), 125.50 (Gann 50-point pivot; targets: 125.00/126.00), 126.15 (July 6 high; 3-month high), 126.84 (April 2 high; 29-month high).

EUR/USD slipped within Thursday's range on profit taking encouraged by technical resistance. Sell-stops were hit at 0.8815. While the upside looks limited at the end of the week, the pair remains in a rising channel.
The euro zone data didn't help the single currency.
The European Commission's business climate indicator fell 0.36 in July from a reading of -0.03 in June. The Commission said the latest data were consistent with the "sharp deceleration in growth in industrial production since January." It added: "The trend in the indicator points to a deteriorating confidence of industrial firms in the euro area."
BoF governor and ECB council member Jean-Claude Trichet defended the ECB's decision to keep interest rates unchanged. Maintaining interest rates at the current level will allow prices to fall, thus keeping inflation at bay, he said. This in turn would spur economic growth, he argued.
The intraday outlook is mixed.

Support: 0.8800 (overnight low), 0.8790 (38.2% Fibonacci retracement level of the June-October downtrend), 0.8689 (20-day moving average), 0.8350 (July 6 low; 7-month low).
Resistance: 0.8841 (overnight high), 0.8842 (Aug. 2 high; 2 1/2-month high), 0.8848 (61.8% Fibonacci retracement level of the Nov. 27-Jan. 5 uptrend), 0.8893 (200-day moving average).

EUR/JPY posted marginal losses within Thursday's range. The cross currency remains though in a rising channel.
The outlook is mixed.

Support: 108.93 (overnight low), 107.50 (100-day moving average), 108.01 (20-day moving average), 105.98 (60-day moving average), 105.80 (38.2% Fibonacci retracement level of May 1999-October 2000 downtrend), 105.50 (200-day moving average), 104.54 (June 20 low).
Resistance: 109.49 (overnight high), 110.15 (Aug 2 high; 3-month high), 111.02 (50% Fibonacci retracement level of May 1999-October 2000 downtrend).

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