Wednesday October 6, 2004 - 10:38:37 GMT
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FOREX: US OPEN MARKET POINTS 10-06-04
Published By: Boris Schlossberg, Fundamental Analyst
What a whipsaw in cable trading tonight! The long suffering pound bulls thought they finally received some good news as the latest Halifax House survey data registered a healthy 1.4% rise in prices on month over month basis, putting talk of a possible November BOE rate hike back on the table. The pound has been in secular downtrend for the past month as more and more traders concluded that BOE had terminated its rate hike policy. Pound selling reached a frenzy after last week's dovish comments from MPC member Kate Barker stating that further rate hikes may not be necessary. Thus, the surprisingly strong HBOS numbers caused an hour and half rally that took sterling up almost 100 points from its session lows. However, the rally did not last long. When UK Industrial production figures printed –0.8% versus 0.3% expected – the largest drop in UK factory output in nearly 2 years – the unit reversed all of its gains in a matter of minutes. Suddenly, the market realized that rising oil process, weakened export demand and the cost of 5 consecutive rate hikes by BOE were taking a serious toll on the UK economy and any possibility of an additional November hike was now moot.
While cable enjoyed a rollercoaster ride the euro dripped a slow and steady decline as September European Retail PMI data reported 48.8 versus 49.7 in August. Germany, France and Italy all reported lower sales than in August. The EU index itself has only risen above 50 just once this year. The best that could be said about EU consumer spending is that it is stable, but certainly not growing as Europe struggles with the same barriers to growth (oil, lower exports etc.) as UK.
FX Spot Overnight
- EUR back to 2270 as rally over 2300 fails on limp eco data
- JPY loses 111 on record oil price concerns
- GBP whipsawed by data but ultimately heads back down below 7800
- CHF firmer than euro on strong gold bid.
11:00GMT – (7:00 AM EST) USD MBA Mortgage Applications (OCT 1) Expected at , Previous 4.9%
12:30GMT – (8:30 AM EST) CAD Building Permits m/m (AUG) Expected at 1.5%, Previous –11.4%
12:30GMT – (8:30 AM EST) GBP NIESR GDP Estimate (SEP) Expected at , Previous 0.7%
14:00GMT – (10:00 AM EST) CAD Ivey Purchasing Managers Index (SEP) Expected at 63.5, Previous 64.5
16:00GMT – (12:00 PM EST) US Fed's Ferguson speaks on personal savings rate
17:00GMT – (1:00 PM EST) US Fed's Poole speaks to executives in Missouri
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