Dollar Hit Record Low by Yan Xu

The dollar extended its loss versus the euro and sterling on expectations that the Fed may cut interest rates again next week. The dollar index slumped to a fresh all-time low at 77.035. The euro approached 1.44 versus the dollar, while the sterling rose to as high as 2.0571.

This week¡¯s economic data, including housing sales, durable goods orders, weekly jobless claims and today¡¯s consumer sentiment index, all showed signs of economic growth slow down. University of Michigan consumer sentiment index fell from 83.4 to 80.9 in October, below the estimate of 82.

It is widely expected that the Fed will lower rates by a quarter-percentage point to 4.00%. Under the pressure of housing slump and rising credit costs, the nation¡¯s economic growth may slow down in the future. The overall sentiment on the dollar is bearish.

Eurogroup Chairman Junker said in a newspaper interview published today that last week¡¯s G7 statement limited to the yuan showed they did not reach agreement on the yen and dollar foreign exchange range. He added that he preferred a stronger euro and the currency¡¯s current trading level was not yet an alarm-causing level. The euro may rise further to reach next target area at 1.4420-50 versus the dollar.

EURUSD will face interim resistance at 1.44, followed by 1.4420 and 1.4450. Additional ceilings will emerge at 1.4480, backed by 1.45. Support starts at 1.4350, backed by 1.4320, 1.43 and 1.4280. Subsequent floors are eyed at 1.4250.

GBPUSD encounters interim resistance at 2.0550, backed by 2.0570 and 2.06. Subsequent ceilings will emerge at 2.0620, followed by 2.0650 and 2.0680. 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.Rising Oil Boosted CAD & AUD

Rising oil prices boosted the commodity currencies, such as the Canadian dollar and the Australian dollar. Crude Oil hit record high at 92.22 per barrel today. The Canadian dollar strengthened to 0.9592 versus the dollar, while the Australian dollar rallied to 0.9176 against the dollar. With increasing demand of gas in the coming winter, oil prices are likely to surge higher.
Yen Fell on Core CPI Decline

The yen fell against high yielding currencies after a report showed core inflation declined in Japan, indicating the end of deflation fight may delay. Excluding food and energy prices, core CPI dropped 0.1% in September. The euro rose from 163 to round 164.50 versus the dollar, and the dollar remained around 114 against the dollar.

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.