Wednesday December 8, 2004 - 10:34:42 GMT
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FOREX: US OPEN MARKET POINTS 12-08-04
As the Dollar Turns to Snow
The dollar finally found some buyers in European session today as the greenback gained about 70 points against the euro, 80 points against the yen and over 100 points against cable from Tuesday’s US close. In Europe, jawboning from various ECB officials yesterday along with year–end profit booking from hedge funds has taken some serious momentum out of the euro rally. Meanwhile, in Japan the continuing miserable economic data (0.1% GDP, declining Machine Tool orders and lower Eco Watchers survey numbers) provided a strong reason for dollar bulls to take the pair up to the 104 handle.
On the political front, the markets are abuzz about possible resignation of Treasury Secretary John Snow and his possible replacement with White House Chief of Staff Andrew Card. According to White House spokesman Scott McClellan, "We appreciate the great job that Secretary Snow is doing. He's an outstanding member of this team. We will keep you posted when we have things to announce." This is a statement pregnant with possibility and appears to hint that Secretary Snow may indeed be on his way out. Snow departure would likely be viewed quite positively by the FX market, especially if he is replaced by Mr. Card - a well respected and seasoned professional who could establish the same type of policy discipline in the Treasury as he did in the White House.
With little material economic news this week until the PPI numbers on Friday, any positive political news could provide the necessary boost to spark a counter trend dollar rally. If dollar does not completely give up tonight’s gains then all signs will point to an intermediate term top in the EUR/USD.
FX Spot Overnight
- EUR dips below 3300 for first time in a week as profit taking takes hold
- JPY eco data still bad helping USD bulls to rally to 104
- GBP collapses to 9300 in much needed retrace of recent gains
- CHF takes out the 1500 level supported by yesterday’s dovish comments from Roth
- 13:15GMT – (8:15 AM EST) CAD Housing Starts Nov Expected 220K, Previous 225K
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