Articles from May 2005

Euro falls on french non

The US Dollar hit a seven month high against Euro and moved up against all other majors yesterday after a majority of voters in France rejected the EU constitution.
Even though the markets had expected a negative outcome of the poll, the Euro slid drastically in thin trading conditions (with no trading openings on account of holidays in US and the UK markets) and broke the key levels at 1.2500 and 1.2460 respectively.
Traders would now focus on the US ISM manufacturing index and Non-farm payroll data expected this week for further direction.
In a data release today, Japan’s April jobless rate fell to a seven-year low of 4.4% from 4.5% in the previous month.

Outlook for the day
EUR/USD – After a break of yet another crucial support near 1.2460, Euro is looking weak and expected to trade in 1.2350-1.2450 range.
GBP/USD – GBP too is looking weak and expected to trade in 1.8100-1.8200 range.
USD/JPY – Dollar strength is also spilling over to Asia and USD/Yen pair is expected to move higher. Expected range 107.75-109.00.

Euro falls after eu failure

The euro fell in early trading in Asia after the French referendum, amid worries about the effect on European Union economic policy of France’s decision.
Luxembourg prime minister Jean-Claude Juncker, who chairs the 12-nation group of eurozone finance ministers, said after the result: “There is no reason to consider that the French ‘No’ will produce a too huge impact on the European economy.”
But in early trading in New Zealand Monday morning, the euro fell to $1.2523, from $1.2574 in New York late on Friday. The euro has been under downward pressure in recent weeks, at least in part due to worries about the French poll. Sunday night’s results suggested that financial markets had underestimated the scale of the No vote. In early trading in Tokyo, the euro fell fractionally to $1.2528 from $1.2585.
With markets in the UK and the US closed, traders were much more focused on Friday’s US non-farm payroll numbers than digesting last night’s news, he said.
The Nikkei stock average opened up, following a strong overnight session on Wall Street, rather than on any fallout from the French referendum.
Financial market worries about the French vote have centred on fears that a No vote would repre sent a backlash against structural economic reform in the EU.
The decisive No vote is embarrassing for Jean-Claude Trichet, president of the European Central Bank, who throughout the campaign always said he was assuming a “Yes” vote in France. The ECB holds its next rate-set ting meeting on Thursday.

GPD figures bolsters Dollar

The US Dollar rallied against its major counterparts in the trade yesterday, hitting 7-month highs against the Euro, GBP, and CHF on positive revision of US Q1 GDP growth figures.
The first quarter GDP figures were revised to 3.5% from earlier 3.1% growth estimates. Although the figure was lower than market expectations of 3.7%, it indicated strong US growth compared to Europe and Japan.
In his testimony yesterday, US Treasury Secretary John Snow reiterated that China should move forward on its revaluation of the Yuan without any delay.
In another data release from the US, weekly jobless claims rose to 323K in the week ended May 21 against 322K in the earlier week.
Traders would focus on important US Personal Consumption expenditure (PCE) and Eurozone current account balance data lined up for today which are expected to influence the markets considerably.

Outlook for the day
EUR/USD – Euro is expected to trade in 1.2475-1.2575 range with a slightly weaker bias. US PCE data would give further direction to the pair.
GBP/USD – GBP too is expected to trade in a weaker 1.8200-1.8300 range.
USD/JPY USD/Yen is looking a bit volatile despite positive inflation data.

Sterling holds it’s gains

The US Dollar had mixed trading against its major counterparts (except Yen).
The Euro and GB Pounds survived the Dollar assault at their key support levels near 1.2550 and 1.8250. However, Yen moved down on latest comments from a Chinese trade official denying any near term possibility of Yuan revaluation.
In the early European session yesterday, the Dollar moved up against the Euro and GBP on poor fundamental data releases from their respective economies. In Germany the May IFO index fell to 92.9 against 93.3 in the previous month, while UK Q1 GDP was revised down to 0.5% vs. previous 0.7%.
In early New York session, the US durable goods orders failed to have much of an impact on the markets despite a better than expected increase. Durable goods orders rose by 1.9% in April against a drop of 1.6% in the previous month and better than expectations of a 1.2% increase.
In another data release, US April New Home sales rose to USD 13.2 billion from USD 14.31 billion in March.

Outlook for the day
EUR/USD – Euro is expected to trade in 1.2550-1.2650 range with a slightly positive bias.
GBP/USD – After surviving 1.8250 support yesterday, GBP has formed one more support at 1.8300 and is expected to move towards 1.8400.
USD/JPY – USD/Yen is looking a bit volatile with different comments coming from China.

Volatile dollar down overall

The US Dollar witnessed a high amount of volatility yesterday before ending flat.
The Euro and GB Pounds moved above their technical levels near 1.2600 and 1.8325 respectively, but encountered selling after the release of the May 3rd FOMC meeting minutes. The Fed minutes gave a mixed message confirming that in the short term measured interest rate hikes would continue, but at the same time expressed the view that long-term inflation is contained.
US Existing home sales rose by 4.5% in April from 0.7% in the previous month. Traders would now turn their attention to US durable goods orders and German IFO data release for fresh directions.

Outlook for the day
EUR/USD – With a support at 1.2550, Euro again needs to beat 1.2600 resistance for a meaningful upward correction.
GBP/USD – GBP is expected to remain volatile in 1.8250-1.8330 range. It needs to trade above 1.8250 support in order to prevent further selling.
USD/JPY – USD/Yen is expected to trade in 106.80-107.80 range.

Dollar holds gains

The US Dollar slipped slightly but held most of its gains in a rangebound trade yesterday.
Concerns about the eurozone regions economic and political developments kept Euro bidders away from the markets. The ECB Chief Jean-Claude Trichet denied any possibility of a Euro interest rate cut despite slow growth in some of the regional economies- with Italy back in recession and unemployment rates above 12% in Belguim and above 10% in Germany, Spain and Greece and just under 10% in France.
He also urged China indirectly to take steps to counter global trade imbalances.
Sterling traders will look forward to the FOMC meeting minutes due today.

Outlook for the day
EUR/USD – Mired by political developments, Euro is expected to weaken and likely to trade in 1.2500-1.2600 range.
GBP/USD – Sterling is facing a resistance near 1.8325 and expected to weaken in 1.8225-1.8325 range.
USD/JPY – USD/Yen is expected to trade in 107.25-108.25 range.

Sterling & euro fall against Dollar

The US Dollar extended its technical gains on Friday scoring fresh multi month highs against the Euro and Sterling amid broad improvement in sentiment for the US currency.
The Euro fell below 1.2600 after the latest French opinion polls showed a 53% vote against the EU Constitution referendum.
In his speech on Friday, Federal Reserve Chairman Alan Greenspan said that even though the revaluation of the Yuan would push up import prices, it would not help to reduce the US trade deficit.
His remarks however, had little impact over the currency markets. Players now await important data from the US, mainly FOMC meeting minutes, GDP and durable goods data lined up for this week.
In news from India, their foreign exchange reserves fell to USD 140.174 billion in the week ended May 13, down by 1.31 from USD 141.48 billion mainly on account of revaluation of currency assets.

Outlook for the day
EUR/USD – Euro is looking weak and expected to move down in 1.2500-1.2600 range.
GBP/USD – GBP too is looking weak and expected to find support in 1.8100-1.8200 region. Expected range today is 1.8200-1.8300 with a downward bias.
USD/JPY – USD/Yen is likely to extend its gains today and expected to trade in 107.75-109.00 range.

Pound continues slide against Dollar

The US Dollar was marginally up but was well within its technical range against its major counterparts in trade yesterday.
Sterling saw a brief spurt on the release of higher than expected monthly UK retail sales data, but the rally was soon neutralized on aggressive technical selling near 1.8425.
Dollar gained slightly earlier in the session on positive US jobless claims data and shrugged off weak manufacturing data from the Federal Reserve Bank of Philadelphia.
Jobless claims in the US fell to 321,000 in the week ended May 14 from 341,000 in the previous week. The Philadelphia Fed manufacturing index slumped to 7.3 in May compared to 25.3 in the month of April, falling way below forecasts of a drop to 18.3 causing concerns of a slowdown in manufacturing sector.
In another data release, Eurozone Industrial production in March dropped by 0.2% compared to a 0.6% dip the previous month.

Outlook for the day
EUR/USD – Euro is expected to trade in a range today. Expected range 1.2600-1.2700.
GBP/USD – GBP is expected to test the resistance at 1.8400. A breach could send it to 1.8500 levels. Expected range today 1.8350-1.8450.
USD/JPY – With resistance at 107.75, USD/Yen is likely to fall back to 107.00 levels.

Far East currencies realign

The currency markets’ focus was clearly on Asia on Wednesday after the Hong Kong Monetary Authority surprised traders when it chose the day that China initiated domestic trading of foreign currency pairs to widen the trading band of the Hong Kong dollar.
The move was designed to deter speculators from using the HK dollar as a proxy to bet on the long-awaited revaluation of the renminbi.
Much later, in afternoon trade in New York, the dollar dipped after South Korea’s central bank governor said the bank had “sufficient reserves. He did not anticipate raising reserves further”- which led observers to conclude it planned no more interventions to weaken the won, currently near seven-year highs at about Y1,002 to the dollar.
The recent Dollar rally witnessed a healthy correction yesterday triggered by subdued US inflation data release. But earlier in the Asian session, Dollar moved to a new multi-month high against GBP (below 1.8300) and also pushed Euro and Yen to their intraday lows of 1.2587 and 107.81 respectively. US April CPI rose by 0.5% from an increase of 0.6% in the previous month, while core CPI was unchanged in April after a climb of 0.4% in the previous month.
In other news, minutes of the latest BOE meeting showed 8 members (out of 9) favored holding the benchmark short-tern rate at 4.75%. UK unemployment rate remained unchanged at 2.7% in April vs. the previous month.
Outlook for the day
EUR/USD – Euro is expected to test the resistances at 1.2700 and 1.2750 levels. Expected range 1.2625-1.2725.
GBP/USD – Resistance in 1.8420-1.8450 range seems difficult to be challenged and hence GBP is expected to trade in 1.8330-1.8430 range.
USD/JPY – USD/Yen is testing the supports near 106.90 and a breach would trigger a fall to 106 levels. Expected range 106.50-107.50 with a downward bias.

Dollar gains after Treasury currency report

With yesterday’s mixed bag of data from the US and with the US Treasury stopping short of accusing China of keeping its currency artificially low, the Dollar remained relatively unchanged against majors.
US PPI came out to be 0.6% against the expected number of 0.4% whereas industrial production dropped by 0.2% against expectation of increase by 0.2%. The housing scenario in US also improved with housing starts at 2038K (Exp: 2000K; Prv: 1836K). With US CPI expected today at 0.4% against the previous figure of 0.6%, a major breakout of current levels is expected in majors.
The recent data is building up a case for further dollar strength in the near future, as dollar bulls are operating full throttle.
Also expected is the unemployment data from UK, which seems to be providing a temporary support to cable before further downfall.

Outlook for the day
EUR/USD – Euro is expected to trade in 1.2550 – 1.2650 range today. A major break out of the 1.2600 support is expected during the day.
GBP/USD – Cable is showing further weakness, with the range being 1.8280 – 1.8350.
USD/JPY – Technically Yen looks weak, with current range being 107.30 – 108.10 and marching towards 108.50 in the near future.