Tuesday July 1, 2008 - 10:04:07 GMT
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Forex Research - Pound Nears 2.00 Euro Holds Steady -Will US Manufacturing Worsen?
by strong rebounds in both German Retail Sales and unemployment data,
the EURUSD held steady in early European trade holding the 1.5750 level.
â€¢ Japanese Yen: Tankan at 4 year low but better than expected
â€¢ Australian Dollar: RBA turns neutral suggest no more hikes this year
â€¢ Euro: German Retail Sales and labor data rebound strongly
â€¢ British Pound: PMI Manufacturing
â€¢ US Dollar: ISM Manufacturing on tap
Pound Nears 2.00 Euro Holds Steady â€“Will US Manufacturing Worsen?
Buoyed by strong rebounds in both German Retail Sales and unemployment
data, the EURUSD held steady in early European trade holding the 1.5750
level. German Retail Sales improved markedly rising 0.7% versus â€“1.1%
decline the month prior. Most of the gains however were driven by
higher petrol prices while the combined May and April results were
still 2.25% lower than the average in Q1 of this year.
Labor markets also saw better results as German unemployment decreased
by â€“38K far better than â€“14K forecast. After last monthâ€™ s increase in
unemployment â€“ the first in more than 2 years â€“ some analysts feared
that Germanyâ€™s job engine may have come to a grinding halt creating a
potential problem for economic growth in the second half of 2008.
Todayâ€™ s news however, puts some of those worries to rest and suggests
that ECB has scope to tighten monetary policy further without causing
undue damage to the EZ economy.
We have always argued that as long as employment in the region
continues to expand European monetary authorities will have a
relatively free hand in setting policy without too much interference
from politicians in the region. Todayâ€™s strong improvement in German
labor data indicates that Mr. Trichet and company will most likely take
advantage of the supportive economic data and raise rates another 25bp
Pound meanwhile came within a whisker of the 2.0000 figure in early
London trade as demand for GBPJPY drove the pair higher on the open but
it hit a wall after disappointing UK PMI Manufacturing data which
printed at 45.5 well below consensus estimate of 49.8. The
manufacturing sector now stands deep in contraction territory and may
make it more difficult for BoE to remain neutral for the rest of the
year especially if manufacturing deteriorates further dragging down
Manufacturing will be the center of attention in North American session
as well today as traders will parse the latest data from ISM
Manufacturing survey. Market players will focus on the prices paid
component to gauge the impact of soaring energy prices on manufacturing
inputs as well as the employment data to handicap the NFP release due
on Thursday. The leading indicators are mixed with both Empire and
Philly showing weakness but Chicago PMI coming in a bit better than
Finally oil is once again likely to be a key driver of trade. After
setting a new high, crude traded down yesterday, perhaps suggesting
that demand destruction is finally starting to take hold. If crude
prices see a sharp retrace, the greenback may get a reprieve
irrespective of the economic data on the US calendar today.
Will EUR/USD Trade Back to 1.60? Join us in EURUSD Forum
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