Friday October 22, 2004 - 10:04:48 GMT
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Forex: US OPEN MARKET POINTS 10-22-04
Quiet, lackluster night of FX trading in the European session as the EUR/USD consolidates the gains for the week. With no economic events on the US calendar, this consolidation is likely to continue for rest of the day barring any major geo-political news or further positioning moves by macro hedge funds. The EZ eco data remains unimpressive as Italian Retail Sales retrench far more than expected (-1.9% vs. 0.4% consensus on a year over year basis). Industrial New Orders decline -0.6% on month over month basis but gain a substantial 10.6% from last year.
At present, the bid in the EUR/USD is controlled by political concerns rather than economic news. As US election nears the final week of the campaign the race for all intents and purposes is tied and the uncertainty for the market is unlikely to be resolved until every vote is cast. This is typical price action for the FX market as currencies tend to destabilize before any close elections more because of unpredictability of the event rather than any specific policy implications of whichever candidate wins the office. Once the US election is resolved the market is likely to refocus on economic news-flow.
On the economic front, the most interesting news comes from UK which reported a lower than expected GDP numbers (0.4% vs. 0.5% consensus) indicating that the slowdown is indeed for real. Yesterday’s positive UK Retail Sales which printed 1.0% vs. 0% expected, emboldened pound bulls to rally cable 150 points on speculation that BOE may yet raise rates 25bp before year end. However, today’s dampened results quell any possibility of such action, especially in light of a –13.8% decline in UK car production for the home market and the pound is declining accordingly.
FX Spot Overnight
- EUR ranges no more than 30 pips but holds the 2600 handle
- JPY comes off 107.50 lows as MOF official comments indicate displeasure with current low rate
- GBP retraces of disappointing GDP data as BOE rate hike hopes fade
- CHF makes forays to 2170 level approaching 11 year lows
No events scheduled
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