Latest forex updates

Thursday, October 25, 2007
The dollar edged down slightly after a report showed US housing sector continues to slump. US existing home sales fell 8% in September to an annual rate of 5.04 million units, below the estimate of 5.25 million. The euro climbed to 1.4267 versus the dollar, while the sterling gained 20 pips to 2.0515 against the dollar. Tomorrow the market will pay attention to US new home sales which are seen down from 795k to 780k.

Earlier today, Merrill Lynch reported 7.9 billion losses for the third quarter, exceeding the 5 billion estimate made earlier this month. The larger-than-expected writedown promoted investors to reduce demand for carry trades, boosting the yen against high yielding currencies. The yen is trading around the 114 level against the dollar on Wednesday.ECB board member Gonzalez said today “a mechanical increase in inflation above 2% is not sufficient reason to change our assessment of risks to price stability.” He said the central bank will ignore an inflation rise if it is driven by oil price surge recently, indicating the central bank would not rush to lift rate. The ECB is expected to keep its interest rates at 4.00% unchanged till the end of this year.German IFO survey for October is due early tomorrow morning.

The headline is seen to fall slightly from 104.2 to 103.8. The current conditions index is expected to change from 109.9 to 109.4. The expectations index is expected to change from 98.7 to 98.4.EURUSD will face interim resistance at 1.4280, followed by 1.43 and 1.4340. Additional ceilings will emerge at 1.4370, backed by 1.44. Support starts at 1.4230, backed by 1.42, 1.4170 and 1.4150. Subsequent floors are eyed at 1.41. GBPUSD encounters interim resistance at 2.0540, backed by 2.06 and 2.0650. Subsequent ceilings will emerge at 2.0680, followed by 2.07 and 2.0720. On the downside, support begins at 2.05, followed by 2.0470 and 2.0450. Additional floors are eyed at 2.0430, backed by 2.04 and 2.0350.USDJPY encounters interim resistance at 114.30, backed by 114.50 and 114.80. Subsequent ceilings will emerge at 115, followed by 115.20 and 115.50. On the downside, support begins at 114 and 113.80, followed by 113.50. Additional floors are eyed at 113.20, backed by 113 and 112.70.