| 5/23/2008
2:31 PM: EUR/$..1.5771 $/JPY..103.36 GBP/$..1.9790
$/CHF..1.0231 AUD/$..0.9601 $/CAD..0.9883
Greenback Struggles vs
EUR, JPY
The dollar slipped lower against the majors as
surging crude oil prices continue to weigh on
the currency, falling near the 1.58-level against
the euro and 103 versus the yen. US equity bourses
continued to struggle with the Dow Jones and Nasdaq
expected to close at its worst weekly performance
in over three-months. We expect the greenback
to extend losses into next week with interim targets
at 1.59 against the euro and 102 versus the yen.
Existing home sales data was slightly better
than expected, down 1% to 4.89 million units in
April versus 4.93 million units a month earlier.
However, the unsold homes inventory spiked by
10.5% to 4.55 million units – its highest
level since the measure was first tracked in 1999.
Further reaffirming the struggles facing the housing
market, the median price for existing homes dipped
by 8% in April compared with a year earlier.
GBP Edges Higher
The sterling crept higher against the dollar,
pushing toward 1.9850. The 2nd release of UK Q1
GDP was unrevised at 0.4% q/q and 2.5% y/y. Nonetheless,
economic growth remains sluggish in the UK and
will likely keep the Bank of England in its current
bind, with inflation creeping higher and soft
growth prospects.
Cable retreated slightly, dipping near 1.9780
with support seen at 1.9740, followed by 1.97
and 1.9660. Additional floors will emerge at 1.9630,
backed by 1.96 and 1.9550. On the upside, resistance
is eyed at 1.98, followed by 1.9850 and 1.99.
Subsequent ceilings are seen at 1.9925, backed
by 1.9960 and 2.
Yen Firms
The yen advanced toward the 103-handle against
the dollar amid sustained pressure in the price
of oil and declines in equities. We look for USDJPY
to test near the 102.60-region, which marks the
neckline for a double-top formation. A breach
of 102.60 paves the way for a move toward 99.50.
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