[IMAGE] Forums Discuss these points in the Forums:  Forexnews Forum       Technicals 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:   2.5%  0.15%  3.75%  4.5%  1.75-2.75%       [IMAGE] 	 [IMAGE]  USD Adds To Gains As Growth Concerns Hurt EUR, JPY  October 22, 7:00 AM: EUR/$..0.8976 $/JPY..121.66 GBP/$..1.4310 $/CHF..1.6449  USD Adds To Gains As Growth Concerns Hurt EUR, JPY by Jes Black  At 10:00:00 AM US Sept. Leading Indicator (exp -0.4%, prev -0.3%) At 2:00:00 PM US Sept Fed Budget (exp 28.6 bln, prev -79.9 bln)  The dollar added to last week's gains, rising across the board in both Asian and European trading this morning. EUR/USD revisited Friday's low of 89.67 while the dollar continued to test heavy resistance around 121.70 yen. Dealers drove the dollar higher for both internal and external reasons. Helping the dollar was the US equity market's resilience last week in the face of the first barrage of Q3 corporate earnings reports. Anthrax scares also failed to move the market by the end of the week, thereby helping the dollar despite the obvious risks of bio-terrorism. With the risk-aversion problem fading for the dollar, dealers have reassessed relative growth rates amongst the majors and found the US economy to have better long-term prospects.   Weakness in the other major currencies can be attributed to the underlying market perception that aggressive fiscal and monetary policy will pay off for investors who bet on the US recovery. Last Friday's German Ifo survey added weight to that view. The September survey posted the worst figure in 8 years and the biggest point decline in 28 years, as it fell to 85.0 from 89.5. This put the market on recession watch, as it reinforced fears of a possible contraction in German growth for Q4, which would put even Finance Minister Eichel's 0.75% 2001 growth target at risk. The Ifo report has also shaken confidence that the Eurozone economy would outpace the US over the near-term and has increased the risks of a contraction in the Eurozone, even though a technical recession is still unlikely. According to the Organization of Economic Cooperation and Development's latest release, the outlook for world economies is now the worst since 1982. US 2002 growth was revised down to 1.3% from the earlier 3.1%, while EU 2002 growth forecast was revised to 1.5% from 2.7%.   Falling economic growth has led to rising budget deficits and higher unemployment in the Eurozone. This has put the European Central Bank under intense pressure to lower rates, and it will again be at the forefront of investor thought when it meets this Thursday. But even though the Ifo survey was very bad, European Central Bank members did little to calm investors' nerves last week. This will likely keep pressure on the euro as markets gauge whether or not the ECB will appease politicians and businesses with another rate cut. However, even if the ECB were to lower rates, the market reaction could be muted because it has already been priced in for some time now. Therefore, the euro again finds itself in a lose/lose situation because the ECB has failed to be promote growth. Moreover, according to data released from the Chicago Mercantile Exchange, since October 9, when EUR/USD was trading around 92.20, there has been a 20% unwinding of euro long positions by non-commercial accounts. But the market is still long euro and the heavy selling could continue if the ECB does not cut rates.  EUR/USD maintained above yesterday's low at 89.67. Follow-up support is seen at 89.43, the descending channel support line from 93.35, followed by 88.40, the 50% Fibonacci retracement of the move from 83.48 to 93.45. EUR/JPY managed to recover most of Friday's losses, to regain the 109 level. Strong resistance is still seen at 109.50 but further weakness in the Japanese economy will help to push EUR/JPY higher.   The yen also fell against the dollar to a day's low of 121.70. A sharp year-on-year decline in Japan's trade surplus in September and a further drop of 0.1% in the MITI tertiary sector index sent the yen tumbling across the board. However, dealers say that the market has grown resistant to trading the yen lower because the constant stream of gloomy economic data is now expected. Therefore, more rangebound trade is expected in the yen this week.  GBP/USD hit a fresh two-month low of 1.4315 as traders also came to favor the US economy's prospects over that of the UK. Sterling has now confirmed its break below the 1.44 level, which is the key 38.2% Fibonacci retracement of the move from 1.37 to this month's 8-1/2 month high of 1.4836. A sustained break of the August 28 low of 1.4375 is seen increasing the bearish outlook for sterling. But, sterling's five-cent slide in two weeks may move into a stabilization period this week as investors contemplate the recent sell-off. Boding well for the pound is the fact that the Bank of England appears ready to ease monetary policy again in order to bolster economic growth. The decline in September inflation below the 2.5% target will provide the central bank with leeway to cut interest rates again by another 25-bp this year and the BoE's willingness to spur growth (unlike the ECB) will benefit the pound. Support holds at 1.4320, 1.430 and 1.4265. Upside capped at 1.4420, 1.4450 and 1.4480. Against the euro, the pound also fell to a one-week low of 62.73 pence.  USD/CHF regained Friday's highs around 1.6450 before easing back again, but is still seen supported above the key 1.64 level. The dollar's ability to maintain above 1.63 will be needed for it to maintain its bullish trend as it targets the 1.65 level. However, any major negative developments for the US, at home or abroad, would quickly translate into gains for the franc.  No key data was released from the Eurozone or UK today making trade quiet as dealers await the US leading indicators due at 10:00 AM. The negative impact from rising jobless claims and falling stock prices is expected to push the leading indicators figure down 0.4% in September after a 0.3% fall in the previous month.  Meanwhile, dealers will look to see if the dollar holds up as well as it did last week in the face of poor earnings reports for Q3. About half of today's earnings announcements will come after market close, thereby keeping trading volumes light in the regular session. One major sector represented in earnings announcements after the bell today is financials, like Moody's. Because of this, dealers may look to the war in Afghanistan for an indication of the effectiveness of the US ground operation as troops search for Osama bin Laden. The general lack of direction from Wall Street kept Asian and European bourses relatively unchanged today, albeit in positive territory. US futures are down slightly ahead of the open.  	[IMAGE] Audio Mkt. Analysis Euro Crawls Up In Quiet Trading       Articles & Ideas  EURO: German IFO Will Remind ECB to Build Growth    Dollar Comeback Stopped by Risk of Terrorism       Articles & Ideas Forex Glossary   Economic Indicators   Forex Guides   Link Library      [IMAGE] 	
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