[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:   2.0%  0.15%  3.25%  4.0%  1.75-2.75%       [IMAGE] 	 [IMAGE]  Recent Dollar Gains Give Way To Profit Taking  November 20, 7:00 AM: EUR/$..0.8830 $/JPY..122.90 GBP/$..1.4181 $/CHF..1.6523  Recent Dollar Gains Give Way To Profit Taking  by Jes Black  At 8:30:00 AM US Sept Int. trade (balance BOP basis) (exp -15bln, prev -27.1bln) US Sept Exports (exp 78.3 bln, prev 84.5 bln) US Sept. Imports (exp 93.3 bln, prev 111.6 bln) At 8:40:00 AM US Redbook (exp 1.5%, prev 1.7%) At 10:00:00 AM US Oct Leading Indicators m/m (exp 0.1%, prev -0.5%)  The dollar's rally stalled on Tuesday at 3-month highs around 123.45 yen and 87.70 cents to the euro following overnight comments from San Francisco Fed's Parry that a US economic recovery is unlikely until the end of the first half of 2002. Meanwhile, a confirmation from China that it would increase its allocation of euros in its FX reserves was supportive of the single currency. Some estimated the move may involve as much as 20 billion dollars, but the combined good news for the single currency and bearish news for the dollar still failed to put the pair back above key resistance at 88.40. USD/CHF also held above an earlier low of 1.6506 as it continued to correct from last week's dizzying 5.5-centime gain. USD gave way to heavy profit-taking as dealers also anticipated a possible decline in US equities on Tuesday following impressive gains overnight. Choppy trade ahead of a shortened Thanksgiving holiday week should add to volatility, but USD is not expected to lose its bullish trend any time soon. Ahead of the holiday, traders will look to today's trade data from the US as well as tomorrow's key Ifo survey from Germany.  Dealers will watch today's US trade data which is expected to show a narrowing of the deficit to $15 billion from $27.1 billion in August. Due to the accounting treatment of foreign insurance payments related to the WTC attacks, the deficit could shrink to around $14-15 billion compared to the $24-25 billion that is expected. The $11 billion in insurance payments would have a positive impact on nominal GDP for Q3 GDP due on November 30 and would give a psychological boost to the market. However, this is completely offset in the deflator and does not affect real GDP, which is still expected to fall around 0.9% in Q3. Therefore, since the adjustment for reinsurance claims in nominal GDP is fully offset by the GDP deflator, only the decline in exports which does not count the $11 billion in insurance claims will be counted towards real GDP. Trade flows were disrupted following the 9/11 attacks and reduced both imports and exports, but according to the commerce department, every $1 billion decrease in the September deficit is worth between 0.1 and 0.2 points on the real GDP growth rate.  Meanwhile, the leading indicators index appears to have risen in October by a slight 0.1% after falling 0.5% in September. However, this figure could be distorted upwards due to an irregularity in delivery times.   EUR/USD rose to a session high of 88.38 in European trade, but after its inability to hold onto gains above 88.40 last week, the pair is expected to edge back towards the 88-cent level. On Monday, the euro reached a 3-month low of 87.67 but maintained above key resistance around 87.45. Weighing on the single currency was the Bundesbank's November monthly report which indicated as expected that Q3 growth was flat to negative for the Eurozone's number one economy. No growth in Q2 (-0.003%) also contributed to a year on year growth rate of around 0.25%, down from 0.6% reported in Q2, thus showing that German growth rapidly deteriorated towards a technical recession.   GBP/USD rose to a session high of 1.4190 after trade data came in largely as expected with a September trade deficit of 2.25 billion pounds. Expectations were for a fall to 2.1 billion after August's 3.3 billion deficit. The fall in the September trade deficit was helped by a larger than expected surplus with the US. The figure alleviated some concern in the market since last week's comment by Bank of England member King who pointed out that the current account imbalances might lead to a weaker pound.   Nevertheless, cable continues to suffer from this comment as well as last Wednesday's inflation report by the Bank of England, which signaled a shift in market sentiment towards the pound. The market is now more aware of the weaknesses the UK faces due to the internal and external imbalances in the economy. Moreover, the market fears the Bank is more concerned about future inflationary pressures given that interest rates are now at a 40-year low. Therefore, with interest rates likely to be left on hold just as the labor market is showing its first signs of weakness, the pound has slipped from last week's high around 1.46 to yesterday's 3-1/2 month lows around 1.41. Dealers say cable's break of support at 1.4195 is bearish, and is now targeting the 1.4000 level. Resistance now stands at 1.4195 followed by 1.4220.  Meanwhile, USD/JPY edged back to key support around 122.75 after reaching a fresh 3-month high of 123.45 on Monday. This correction was expected after recent gains, but any selling back towards 122.50 or 122.00 sould not be enough to offset the overall bullish trend. Sentiment continues to underpin USD because of the renewed momentum in US equities as investors show an increasing appetite for risk. The yen also came under additional pressure from mounting worries about the Japanese banking sector ahead of a slew of earnings reports by major Japanese banks later this week. However, it is worth noting that Japanese banking problems can sometimes lead to yen appreciation if those institutions are having to repatriate foreign funds to cover losses. But, with little room for improvement in the Japanese economy until late next year, most market watchers see the yen heading for 125 now that it has successfully breached the 123 mark. Resistance is seen around 123.35/45. But USD/JPY support is expected to hold at 121.40/50, with any pullback towards the latter level seen as a buying opportunity, dealers said.  	[IMAGE] Audio Mkt. Analysis USD Hits Fresh Multi-month highs vs EUR, JPY, GBP       Articles & Ideas  USD/JPY: The Next Level   OPEC: The beginning of a price war?       Articles & Ideas Forex Glossary   Economic Indicators   Forex Guides   Link Library      [IMAGE] 	
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