Jim Cote and Cornelius Luca //
Chicago, Aug. 8 (BridgeNews) - The dollar slumped to a 19-day low versus the yen despite the lack of light in the long and deep Japanese economic tunnel. But the greenback gained on the euro on hopes U.S. growth will pick up by 2002. The Fed will release its beige book report of economic conditions in the 12 Federal Reserve Bank districts at 1400 ET. June's report from Fed area banks contained comments like "the worst is over."

Euro/dollar trimmed losses from an eight-day low of 0.8741, sterling/dollar steadied despite Bank of England fears, dollar/Swiss franc rose to a one-week high of 1.7227 and dollar/Canada slipped within an inside range.

Current Previous Change Global Global
NY open NY close low high

USD/JPY 122.92 123.62 -0.70 122.81 123.68
EUR/USD 0.8766 0.8775 -0.0009 0.8741 0.8780
EUR/JPY 107.75 108.48 -0.73 107.67 108.50
GBP/USD 1.4157 1.4156 0.0001 1.4148 1.4175
USD/CHF 1.7179 1.7175 0.0004 1.7167 1.7227
USD/CAD 1.5323 1.5350 -0.0027 1.5315 1.5355
AUD/USD 0.5155 0.5150 0.0005 0.5145 0.5164

USD/JPY fell to a 19-day low despite poor Japanese data and pervading pessimism and broke the 100-day and the 60-day moving averages, which have supported the pair all summer.
Japanese Vice Finance Minister for International Affairs Haruhiko Kuroda said that there has been no change in Japan's FX policy and that further BOJ easing is necessary to stop deflationary pressures. However, he added that the MOF would not resist JPY weakness as a result of BOJ easing.
Kyodo News reported sources in the IMF who said that the Fund is considering a downward revision of its 2001 Japanese growth projection to a 0.2% fall from the current 0.6% forecast increase.
Japan's business survey index fell to a reading of -33 in Q2 from -26 in Q1.
The outlook is bearish.

Support: 122.81 (overnight low), 122.70 (July 20 trough), 122.50 (Gann 50-point pivot; targets: 122.00/123.00), 121.05 (Gann 50-point pivot; targets: 120.55/121.55).
Resistance: 123.08 (100-day moving average), 123.68 (overnight high), 124.00 (Gann 50-point pivot; targets: 123.50/124.50), 124.05 (20-day moving average), 125.50 (Gann 50-point pivot; targets: 125.00/126.00), 126.15 (July 6 high; 3-month high), 126.84 (April 2 high; 29-month high).


EUR/USD fell to an 8-day low of 0.8741 on weak German, Italian and other European economic news. The EUR is likely to be further undermined by as-forecast data, especially if it shows that the consumer sector is beginning to falter. Until recently, analysts had expected strength there to insulate the euro zone from the U.S. slowdown.
But for the time being, the EUR/USD recouped most of its losses.
French Finance Minister Laurent Fabius said France would stick to public finance goals under the EU's Stability Pact but growth would be weaker this year than in 2000 and would make only a slight recovery in 2002.
ECB chief economist Otmar Issing said the trend in consumer inflation is "balanced" and moving toward the 2.0% target for this year set by the central bank, but "risks remain." He emphasized that inflation remains the focus of monetary policy and that the bank would not be pressured into hasty action regarding interest rate changes.
German final July CPI came in at a 2.6% y/y increase, revised slightly lower from the initially reported 2.7% y/y rise. In a press interview, ECB chief economist Issing said the trend in euro-zone inflation is "balanced" and should converge to the ECB's 2% y/y target by year-end. German chancellor Schroeder lowered his forecast for German GDP growth to 1.5-2.0%, from the previous "around 2%" forecast.
The EUR/USD intraday outlook is mixed.

Support: 0.8741 (overnight low), 0.8723 (20-day moving average), 0.8350 (July 6 low; 7-month low).
Resistance: 0.8780 (overnight high), 0.8790 (38.2% Fibonacci retracement level of the June-October downtrend), 0.8848 (61.8% Fibonacci retracement level of the Nov. 27-Jan. 5 uptrend), 0.8875 (Aug. 3 high; 2 1/2-month high).

EUR/JPY fell to a 16-day low of 107.67 in early trade. The cross currency fell alongside USD/JPY and sells-stops at 107.90 accelerated the decline.
The outlook is bearish.

Support: 107.67 (overnight low), 107.42 (100-day moving average), 105.80 (38.2% Fibonacci retracement level of May 1999-October 2000 downtrend), 104.54 (June 20 low).
Resistance: 108.24 (20-day moving average), 108.50 (overnight high), 110.15 (Aug 2 high; 3-month peak), 111.02 (50% Fibonacci retracement level of May 1999-October 2000 downtrend).

GBP/USD was steady within Tuesday's range despite Bank of England's Monetary Policy Committee comments that the risks to economic growth remain on the downside, the MPC warned, but fears that the value of sterling could collapse meant the risks to inflation were more evenly balanced.
The outlook is neutral.

Support: 1.4148 (overnight low), 1.4207 (100-day moving average), 1.4133 (60-day moving average), 1.3911 (June 20 low), 1.3688 (June 12 low; 15 1/2-year low), 1.3660 (February 1986 trough).
Resistance: 1.4175 (overnight high), 1.4353 (Aug. 2 high; 2 1/2-month peak), 1.4414 (May 21 peak).