[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:   1.75%  0.15%  3.25%  4.0%  1.25-2.25%        [IMAGE]   	 [IMAGE]  USD Resilient Despite Worries Over Corporate America January 17, 7:00 AM: EUR/$..0.8804 $/JPY..132.05 GBP/$..1.4339 $/CHF..1.6651  USD Resilient Despite Worries Over Corporate America by Jes Black  At 8:30:00 AM US Dec Building Permits (exp 1.547 mln, prev 1.595 mln) US Jobless Claims (exp 430 k, prev 395k) US Dec Housing Starts (exp 1.6 mln, prev 1.645 mln) At 2:00:00 PM US Jan Phil Fed Survey (exp  2, prev  -12.6)  The dollar held onto overnight gains despite a poor finish on Wall Street on Wednesday as corporate earnings news dominated over data. EUR/USD fell below 88 cents and USD/JPY rose back above the key 132 level, thus boding well for a resumption of its rally after a weeklong decline stabilized around 131.80 on Tuesday. However, dollar bulls will want to watch tomorrow's meeting between Wasghington and the National Association of Purchasing Managers. Markets have been reluctant bidding USD much higher on the concern that Washington may again waver on the strong dollar policy. Recall, last July when this happened, USD fell because the administration appeared uncertain over the strong dollar policy. However, it is just as important for the US administration let JPY fall in order to keep Japan from falling into a deflationary spiral as many economists fear.  In addition to strong dollar worries, the potential Kmart bankruptcy and the Enron debacle could induce European investors, who have been key purchasers of corporate debt last year, to seek out safer alternatives. That in turn would cause US bound investment flows to falter because of worries over the health of US corporations.  Nevertheless, these fears failed to boost EUR/USD, which fell to a fresh 3-week low of 87.92 in European trade. The sell-off was seen as more technical in nature after falling Tuesday below the key 89.10 level, which marks the 50% Fibonacci retracement of the move from 82.25 to 95.96. This level is significant in that it reflects equilibrium in supply and demand conditions between euro and dollar. Moreover, yesterday's close below 88.60 is a bearish sign for the euro and an inability to regain that level will likely call upon further losses. However, EUR/USD would have to break below 87.48, the 31.8% Fib retracement of the same move and channel support. Only a move back above 89.50 would give any hope of a near term recovery. However, moves higher are not seen by the market as indicating strength given the euro's difficulty to remain above 90-cents.   GBP pared earlier gains against EUR, falling to a day's low of 61.64 and added to losses vs US as it fell to a fresh one-week low of 1.4303.  Cable sank to its lowest level against the dollar in over a month on talk of M?related outflows related to Britain's National Grid Group Plc's $3 billion purchase of US power group Niagra Mohawk. However, sterling was able to recover from these losses and regain the $1.4340 support by afternoon London trade. Yet, Failure for GBP to maintain above 1.4440 will bode poorly for cable as it fell from last Monday's 2-week high of 1.4513, a 3-cent drop in 4 days. Resistance is seen at 1.4390, 1.4440, 1.4480, 1.450 and 1.4550.   On the data front, British retail sales showed a surprising 0.3% fall in December, the first monthly fall in sales since April 2000. December's sales volumes were 5.7% higher than a year ago, down from a 7.0% y/y rise in November and a consensus forecast by economists for a 6.9% rise. The ONS said the fall in December sales volumes was "due to strong November data rather than weak December data." It added that the underlying picture of retail sales growth remained strong. Therefore, the move did not weigh on sterling which has benefited from strong domestic demand in 2001.   USD/JPY rose to a day's high of 132.30 after a weeklong decline stabilized around 131.80 on Tuesday. The pair is still trading below its 3-year high of 133.37 but dealers remain confident there will be more weakness to come in the JPY.   EUR/JPY also recovered to a day's high of  116.97, but fell bac below support at 116.50 to a day's low of 116.01. Moves in the JPY will be important to watch as most of EUR/USD losses on Tuesday and Wednesday came on the back of a steep fall in EUR/JPY to a low of 115.67 from a high of 119.37 last week, or a 3% drop. That's double the losses incurred by USD/JPY. Resistance is now seen at 116.50 followed by 117.00 and key resistance at 117.50. A close above 116.50 will be needed in order to maintain its bullish momentum, dealers say. Key support is seen at 115.60.  The BoJ on Thursday left its gloomy assessment of Japan's struggling economy intact, repeating the economy continues to deteriorate in January and using the same wording as in its December report.  Tuesday marked the start of earnings season and even though most companies beat poor Q4 expectations, the markets responded more to the general outlook. That was evident on Wednesday after Intel beat Q4 estimates but indicated that it was cutting its cap ex spending more than expected to $5.5 bln from $7.3 bln last year, a 25% reduction. This took the market by surprise and triggered a sharp slide in Nasdaq. That means Wall Street is looking more at the economic outlook than to the previous Q4 2001, which was assumed to be bad.  It also means the overnight sell-off was mostly a reaction to the market getting ahead of itself in early January without the fundamentals to back it up.   Today's important earnings releases include Citigroup, Ford and Sears. Airline companies to report are US, Northwest and Southwest Air. Its also another big day for technology companies with IBM, Microsoft, Nortel all reporting on Thursday.  Today's jobless claims are expected to rise to 426k from last week's 395k due to underfiled claims in California because of a new law. The rise may be offset slightly by the re-opening of auto factories after a winter close and decreased layoffs in the retail sector.  Markets will also look to the Philly Fed survey to show improvement in the overall manufacturing activity in the Philly Fed area. The index is expected to improve to -2% from -12%. Though negative, such an increase would confirm that the economy is indeed turning around.  Also due for release in the US session is housing starts, which are forecasted to decline slightly to 1.6 million from the previous 1.645 mln though holding fairly strong. Housing permits are estimated to edge up to 1.6 million in December from the previous 1.595 mln.     	[IMAGE] Audio Mkt. Analysis USD Steadies Despite Equities Sell-off        Articles & Ideas  EUR/USD: Technical Analysis   Greenspan Widens Door for One More, But...       Articles & Ideas Forex Glossary   Economic Indicators   Forex Guides   Link Library      [IMAGE]  	
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