MARKET ANALYSIS

Monday May 14, 2007



EUR-USD
1.3531. It may attempt a test higher to 1.3531 after which weakness may set it to a drift down to below 1.3486 limit.
USD-CHF
1.2182. Decline should be supported around 1.2162 - 1.2143 zone for rally to above 1.2233. A clear break of 1.2143 will damage this expected rally.
USD-JPY
120.10. It may attempt a test higher to 120.16 after which weakness may set it to a drift down to below 119.63 limit.
GBP-USD
1.9822. Is expected to fall lower than 1.9727. Entry sell point are at 1.9834 or 1.9857 . Stop loss above 1.9857.
EUR-CHF
1.6483. It may attempt a test higher to 1.6485 after which weakness may set it to a drift down to below 1.6437 limit.
EUR-JPY
162.51. It may attempt a test higher to 162.55 after which weakness may set it to a drift down to below 161.53 limit.
EUR-GBP
0.6826. Currently uptrend should end around 0.6843 - 0.6835 area. A correction down to below 0.6810 is expected. A rise above 0.6844 will abort the expected correction.
AUD-USD
0.8317. It should trade lower to 0.8255. Resistances are at 0.8323 and 0.8353. A break of 0.8393 is bullish.
USD-CAD
1.1121. Resistances lie around 1.1145 and 1.1205. It should test lower towards 1.1085 zone. A clear break of 1.1103 would be bearish.


ECONOMIC NEWS ANALYSIS
1. Monday, May 14th, 2007 (4:30 am New York Time) UKWe have UK PPI coming out, and this number measures inflation in the manufacturing sector in the UK, which contributes around 20% of total inflation in the UK. We have the UK PPI Input, which is basically the prices that manufacturers pay for raw materials, and we have UK PPI output, which basically is what UK manufacturers are charging their wholesalers. Both numbers are coming out for April, and PPI input is expected to rise by 1.0%, and PPI output is expected to rise by around 0.5%. It's hard to say which one is more important, both are pretty important, and we definitely don't want to place trades if both are conflicting by a lot. It's a lot more common to see big jump in the input, rather than output, which is natural, because input is a leading indicator and is a lot harder to predict. Remember, prices of output today will probably depend on what the input prices were few months ago, so the output numbers are usually predicted very well by economists, plus even if the manufacturers have to pay much higher prices for raw materials, they can't always pass it down to their clients, because there is competition, so the output prices seem to be more stable in general. If the prices jump on the input, it doesn't always mean that they will affect the economy as much, because manufacturers may eat the costs. However, output prices will definitely affect the inflation in the country to some degree, so let's focus on the output prices. They are expected at around 0.5% or so. If the number comes out at 1.0% or higher, it would be a very strong psychological number, plus the highest reading in many, many years, so GBP/USD may possibly go up by 50 pips or more in the first hour of the report. If the number comes out at 0.0% or more negative, then it would mean that inflation is slowing, and would be a very big surprise, considering the high oil prices, so GBP/USD may possibly go down by 50 pips or more. If such triggers I hit, I think we will see a pretty big move, regardless of revisions or conflicts from input prices. I may possibly use a less conservative trigger, and still place a trade, but that will depend on other numbers and the price before the report.

That's all for today happy trading

profxpress

disclaimer

The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. Any views expressed may change without notice.

This document is provided