Thursday November 4, 2004 - 13:03:30 GMT
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Forex: Dollar takes something of a beating.
Nov. 4th 0600EST- The dollar has taken something of a beating overnight on the back of President Bush’s re-election as currency traders look forward to an extended spell of low interest rates, higher oil prices and a burgeoning US trade deficit. Tomorrow’s payroll data may offer some respite, but losses have been seen essentially across the board with both the Pound and Euro looking to retest earlier highs as a result. Although the ECB has elected to keep interest rates on hold this month – a decision which did result in a quick run on the Euro - the longer term prospect of tighter monetary policy within the eurozone continues to bolster the common currency and it’s now edging towards the 1.2880 resistance level. A successful move clear of this is without doubt going to pave the way for a retesting of the February high of around 1.2925, whilst the downside should find support around 1.2780, 1.2750 then a significant longer term level at 1.2660-80. Likewise, cable continues to benefit against the run of dollar unpopularity and although gains have been marginally more muted than we’ve seen with other currencies, the scope for a significant rally remains. Although the MPC is widely expected to keep rates on hold this afternoon, there’s every chance that we could see a hike in the next few months and any indication of this could push the Pound towards the 1.8515-20 resistance level. A sustained breach of this would have the potential to allow a rally towards 1.8750 in the longer term, whilst on the downside expect to see cable support at 1.8415-25 then 1.8390.
Provided by CMC Group New York– Nas Nijjar, 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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