[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]  Markets Eye Earnings After Greenspan Effect Weighs on USD January 14, 7:00 AM: EUR/$..0.8930 $/JPY..131.66 GBP/$..1.4494 $/CHF..1.6554  Markets Eye Earnings After Greenspan Effect Weighs on USD by Jes Black  No Key Data. Event New York Fed Pres McDonough to speak at 1:15 PM, Minneapolis Fed Pres Stern to speak at 4:00 PM.  USD started the week lower across the board following the Asian markets reaction to last Friday's comments by Fed Chairman Greenspan, where he pointed out that the optimistic view of economy has not yet been reflected in the real fundamentals. Therefore, markets are wondering whether earnings warnings this week will depress Wall Street after US equities ended a down week on a down note on Friday. Signals from Greenspan is that it's no shoe in that the economy will come out of the slowdown and return to fast growth also mean that markets will look to this week's US data for hints as to the Fed's next move at its monetary policy meeting on January 30.  EUR/USD rose to a day's high of 89.53 before paring gains in European trade to a day's low of 89.22. Weakness against the pound and yen weighed on the EUR/USD rate as the single currency tested support at 61.50 pence and 117.35 yen.  The euro barely held above last Friday's low of 117.25 and failure to hold above 117.50 could be a bearish sign for the euro, especially since much of the euro's recent strength against the dollar has been derived from its strong gains against the yen. However, further weakness is not seen unless EUR/USD falls below support at 89.10.  EUR/USD continues to move within a channel from 88.70 to 89.50 as it hovers around 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 an equilibrium in supply and demand condition between euro and dollar. Today, the pair briefly tested resistance at 89.50, but was rejected. Moves higher are not seen by the market as indicating strength given the euro's difficulty to remain above 90-cents.  Given the mixed data from the Euro area and the US, investors are seen waiting on the sidelines ahead of the latest round of earnings reports from the US for better direction. Dealers will watch to see if U.S. markets are getting ahead of themselves in anticipating a U.S. recovery, meaning that share prices may be overvalued. Until we see corporate earnings improving, share prices aren't likely to rise. Moreover, companies are likely to put all their bad news into Q4 reports for a clean slate in 2002, stock analyst say.  On Friday, Greenspan said a key feature of the recent downturn was a lack of business investment. He said that when it does recover, spending will not resume at breakneck speed. Instead, the present cycle will be driven by a return of corporate profits and capital investment. But those levels aren't expected to reach the levels it did in 1999 and early 2000 when companies were preparing for the Y2K date change and spending large amounts of money on IT investment. This chimed with Richmond Fed president Broaddus who said last week "there's a good chance that the US economy may be at least a little softer than the consensus" expectations and predicted "a more gradual recovery from the recession than in most other post-war business cycles.   Although a restrained economic assessment by Greenspan initially weighed on the dollar, markets may interpret it as slowing the recovery in the euro area as well, which would weigh on the euro.  Sterling rose to a day's high of $1.4505 continued to trade near a day's high of 61.55 pence despite November industrial production, which fell more than expected at -0.7% m/m and -5.4% y/y. The manufacturing numbers were disappointing , but not surprising given the attention paid to the UK's "two speed" economy which BoE officials have spoken of in the past. The data confirms the recessionary state of the sector.   GBP was supported by weekend comments from PM Blair concerning EMU entry. Blair's cautionary remark that there must be an examination of the economic benefits of joining the euro before his government could recommend membership helped push EUR/GBP to a low of 61.55. GBP is now close to its 2001 opening level around 61 pence after falling as far as 62.80 at the start of the year. GBP/USD resistance is seen at 1.450 and 1.4550. Support holds at 1.4370, 1.4340 and 1.4320.     	[IMAGE] Audio Mkt. Analysis BoE inaction Lifts GBP, Comments Hurt CHF        Articles & Ideas  Greenspan Widens Door for One More, But...   A Weak Yen Is the Solution for Now        Articles & Ideas Forex Glossary   Economic Indicators   Forex Guides   Link Library      [IMAGE]  	
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