[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]  Euro Falls Below 90-cents On Bad German Ifo Survey  October 19, 7:00 AM: EUR/$..0.9001 $/JPY..121.16 GBP/$..1.4413 $/CHF..1.6409  Euro Falls Below 90-cents On Bad German Ifo Survey by Jes Black  At 8:30:00 AM US Sept CPI m/m (exp 0.2%, prev 0.1%) US Sept CPI ex food, energy sa m/m (exp 0.2%, prev 0.2%) US August Exports (exp n/f, prev 83.72 bln) US August Imports (exp n/f, prev 112.5bln) US Sept Real Earnings sa (exp n/f, prev 0.3%) US August Trade Balance (exp -28.7 bln, prev -28.8 bln)  The euro suffered a sustained break below 90 cents today following a much worse than expected decline in the key German Ifo survey. EUR/USD fell half a cent to a five-week low of 89.81, putting it at pre-September 11 levels. EUR/JPY also hit a three-week low of 108.90 yen. The headline figure fell to 85.0 in September from 89.5 the previous month, but the Ifo's head economist, Nerb, said the sharp drop in sentiment might have been an overreaction to attacks on U.S. cities. Nerb also said the index could stabilize next month and that its September reading did not yet signal a new downward trend. Nevertheless, the figure was the worst in eight years and will put the European Central Bank under intense pressure next week to lower rates.   According to the Organization of Economic Cooperation and Development's latest release, the outlook for world economies is now the worst since 1982. Average growth in 2001 is estimated to be just 1.0%, followed by a sub-par 2.8% average in 2002. US 2002 growth was revised down to 1.3% from the earlier 3.1%, while Japanese 2002 growth is now expected to contract by 0.8% from earlier projections of 1.1% growth. Therefore, with EU 2002 growth forecast now revised to 1.5% from 2.7%, and no bottoming in the zone's largest economy, European monetary policy will again be at the forefront of trader's minds next week ahead of the ECB's next meeting on Thursday.  Following the Ifo, ECB member Liebscher said it was the work of politicians, not central bankers, to ensure economic growth. That may be, and today's Ifo survey may also be an overreaction. But, there is also a possibility of a contraction in German Q4 growth that would put even FinMin Eichel's 0.75% 2001 growth target at risk. That means the longer the ECB waits, the worse it will be for the euro. Therefore, if the market encounters anything but a clear indication for a cut, the euro will come under further pressure next week, possibly testing downtrend channel support around 89.50.   Other European majors came under pressure against the dollar as well. Sterling fell to an eight-week low against the dollar, which benefited from the euro's losses against the dollar. Moreover, news on Thursday of a sharp slowdown in British retail sales growth continued to weigh on the pound. But, dealers noted the weaker figures had already been discounted and that the Bank of England left the door open for more rate cuts if needed. GBP/USD briefly broke below the 1.44 level to a day's low of 1.4388 in the wake of the Ifo release. However, sterling soon regained 1.4400, which is the key 38.2% Fibonacci retracement of the move from 1.37 to last Monday's 8-1/2 month high of 1.4836. Only a sustained break of the August 28 low of 1.4375 is seen increasing the bearish outlook for sterling. Key support stands at 1.44, while resistance is seen at 1.4450 followed by 1.4500.  The Swiss franc also fell fell 3/4 centimes against the dollar, but then regained that ground. The muted reaction could be due to the recurring safe-haven flows ahead of the weekend as seen in past weeks. U.S. troops are now in Afghanistan, and with the conflict expected to escalate, the US is on high alert for more terrorist attacks. USD/CHF rose to a session high of 1.6447 and is now seen supported above the key 1.64 level. Ability to maintain support above 1.63 would maintain bullish trend in USD/CHF 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.  USD/JPY hovered in a tight range today after spending most of the week in-between 120.80 and 121.80. The yen edged slightly lower against the dollar as the market braced for Japan's preliminary tertiary industry activity index for August due on Monday. But, the yen was supported by its gains against the euro after the weak Ifo index pushed the single currency lower across the board. Also supporting the yen was the approval of a basic extra budget framework by a panel of economic advisers to PM Koizumi. FinMin Shiokawa proposed a 3 trillion yen extra budget, but only 1.68 trillion would be financed by government bonds, thereby leaving JGB issuance under the 30 trln cap promised by Koizumi under his reform campaign.  Today earnings and economic data from the US are not expected to have much influence over the markets. The US trade deficit is expected to hold steady around 28.7 billion, and a temporal rise in gas price is expected to push inflation (CPI) higher in September, but fall in October. Moreover, markets are not worried about inflation because the Fed is still expected to cut rates again this year. Meanwhile, deterioration in Q3 earnings was no worse than expected this week and Q4 forecasts are still the same as previous estimates. Therefore, with very few earnings announcements today markets will likely move more on events linked to the war on terrorism.  	[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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