Thursday November 18, 2004 - 11:38:39 GMT
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FOREX: US OPEN MARKET POINTS 11-18-04
Euro- Buy the Retrace?
Japan’s Vice Finance Minister Koichi Hosokawa warned tonight that firm action will be taken if necessary in the FX market and said that it was important that rates move in a stable manner, reflecting fundamentals. Most market players do not think that BOJ will intervene before the G-20 meeting this weekend. Indeed, the common wisdom on the trading desks is that BOJ will not commence intervention until the yearly low of 103.40 is breached which would trip the stops of many trend momentum traders and trap the USD bears in a massive short squeeze. Of course, in the intricate chess game that is the FX market the BOJ may be already anticipating the anticipators and could start the intervention early catching the market unaware. Regardless, after twice making lows at the 103.66 level, the pair has rebounded above the 104 handle on short covering and bargain hunting.
Meanwhile, after setting record highs, the euro tenaciously holds on to the 130.50 level with Euro-zone data having little effect as the jump in German PPI prices is attributed to one-off effects of extremely high October oil prices. A report by FT notes that George Bush met with a group of US bankers this week to “to assure the markets of his commitment to deficit reduction.“ The news may be welcome news to dollar bulls, but as we cautioned yesterday US military obligations in Iraq may undermine any attempts to control the US Federal budget. For now, the mood of the markets remains dollar bearish and any retrace decline in the EUR/USD will likely serve as a good entry point in the pair’s continuing march upward.
FX Spot Overnight
- EUR trades through 3050 taking out option barriers
- JPY makes a double bottom at 130.66 and bounces back to 104 on bargain hunting
- GBP weaker at 8575 on poor retail data
- CHF pierces 1600 but bounces back
- 13:30GMT – (8:30 AM EST) CAD Int'l Securities Transactions (SEP) Expected C$1.0B, Previous C$0.9
- 13:30GMT – (8:30 AM EST) USD Initial Jobless Claims (NOV 13) Expected 330K, Previous 333K
- 13:30GMT – (8:30 AM EST) USD Continuing Claims (NOV 6) Expected 2800K, Previous 2813K
- 15:00GMT – (10:00 AM EST) USD Leading Indicators (OCT) Expected -0.1%, Previous -0.1%
- 17:00GMT – (12:00 PM EST) USD Philadelphia Fed. (NOV) Expected 23.5, Previous 28.5
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