Friday October 29, 2004 - 15:37:19 GMT
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Forex:Dollar decline temporarily halts on Chinese rate news and dropping oil price.
Oct. 29th 0600EST - The dollar briefly managed to regain some lost ground in yesterday’s trading, largely on the back of falling oil prices. The prospect of an economic slowdown in China through higher interest rates, combined with better than expected oil inventory data has seen the price of US light crude retreat back towards the $50 mark and ultimately this should be good news for the American economy. However, the large trade deficit remains a problem and this is likely to keep the greenback under a degree of downside pressure in the coming weeks. Yesterday’s news pushed cable as low as 1.8195 before staging something of a rally and although Sterling is suffering from the fact that further rate hikes by the MPC now look unlikely, the market does seem to be comfortable close to the 1.83 level. US data due for release this afternoon - including GDP, Chicago PMI and Michigan sentiment figures – could see a move away from here, but currently we’re looking at resistance levels of 1.8350 then 1.8450, whilst on the downside look for support at 1.8285, 1.8265 then 1.8220. The Euro is also churning close to the 1.2750 level after making a brief move down wards during yesterday’s session. The prospect of ECB rate hikes will doubtless keep the common currency in favour over the longer term, but right now
we’re expecting to see support in the 1.2715-30 range then 1.2675, whilst any appreciation on the topside should meet resistance at 1.2770, 1.2815 then 1.2840.
Provided by CMC Group New York– Stuart Scrase, Senior FX Dealer and Enis Mehmet, Head of Operations New York. For up to the moment FX market commentary, a 24 hotline is in place on 866-531-2604.
About CMC Group
CMC Group transacts over $1billion per day across its range of real-time online Foreign Exchange. It is one of the world’s leading online Foreign Exchange, Index and Equity Derivatives providers. Founded in 1989, CMC Group has operations in London, New York and Sydney. It is a member of the US NFA and ASIC in Australia. For further details on CMC Group visit www.cmcgroupplc.com.
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