Monday October 4, 2004 - 10:13:08 GMT
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FOREX: US OPEN MARKET POINTS 10-04-04
The G-7 statement recycled almost verbatim the Boca Raton communiqué of 7 months ago as participants made no meaningful headway on either China’s CNY revaluation or containment of oil prices. Dealers viewed the G-7 outcome as particularly bearish for the JPY as it suffered a double hit as a result of this inaction. The yen will get no near term benefit from CNY revaluation -- which will remain fixed and will therefore stay low to the dollar -- nor any immediate relief from high oil prices. Furthermore, overnight economic data did little to encourage yen bulls as labor cash earnings reported a –0.2% decline year/year indicating that deflation and depressed wages remain a chronic problem for the Japanese economy.
Weak demand is evident in the Euro-zone as well where retail sales printed a disappointing –1.3% vs. 0.1% expected. The decline was led by a large cutback in food and beverages sales of –1.7% hinting that Euro-zone consumers may be feeling the pinch of higher oil and gasoline costs. The euro lost the 2400 earlier in the session and continued to trade downward after the release.
With only Factory Orders on the US calendar we expect little volatility from the trading day unless the slew of today’s scheduled Fed speakers make news with some controversial comments. However, with US election less than a month away and the race effectively a dead heat we believe the various Fed Governors and Presidents will remain circumspect in their remarks.
FX Spot Overnight
- EUR falls below 2400 as Retail data disappoints
- JPY nearly hits 111 as dealers view G-7 as yen bearish
- GBP suffers more selling from model funds but stabilizes after good CIPS data
- CHF absent news follows EUR/USD dynamics
14:00GMT – (10:00 AM EST) USD Factory Orders m/m (August) Expected at 0.1%, Previous 1.3%
12:00 GMT US Fed's Santomero speaks on Monetary Policy
12:30 GMT US Fed's Bernanke speaks on cross-border banking
14:30 GMT US Fed's Poole talks at Lincoln University
15:00 GMT US Fed's Bies speaks on international fin risks
16:00 GMT US Fed's Gramlich speaks on predatory lending
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