Wednesday January 5, 2005 - 10:57:37 GMT
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FOREX: US OPEN MARKET POINTS 01-05-05
Euro Down but Not Completely Out
Lackluster PMI services data from the Euro-zone tonight only reinforced the FX market’s recent worries about the specter of stagnation creeping into the European economy. The overall number slightly missed expectations coming in at 52.6 versus 52.7, however the PMI Services report for Germany – the region’ s most important economy – was materially lower printing at 51.0 against 52.0 projection.
With French unemployment at 5 year highs and German joblessness reaching levels not seen since 1997, European consumers are deeply troubled by the deteriorating economic prospects on the Continent and have curbed their spending as a result. The tepid eco data provided little support to euro longs who have had to suffer a 400 point decline in the unit since the start of the year.
Still, the unit found some support around 1.3200-50 as most traders squared positions ahead of Friday’s NFP report. How long that support may last, however, is an open question. As usual the expectations for the number are all over the board with low calls at 65K and high ones at 300K. The median projection is for 175K and should the actual report match that number, we believe it would be dollar bullish. After yesterday’s release of FOMC minutes which indicated a decidedly hawkish bias from the Fed, the FX market is likely to interpret a strong employment number as providing a carte blanche for Mr. Greenspan and company to continue to raise rates.
Meanwhile, much to the relief of the Japanese monetary authorities, the dollar also tacked on 250 points against the yen as USD bullishness also swept Asia. With little material Japanese data until next week, the pair is likely to be driven by dollar dynamics for the next few days. As USD/JPY moves further away from parity the fear of intervention - which so preoccupied the market in November and December - should recede as well.
FX Spot Overnight
- EUR continues its post-holiday unwind as eco data offers little support
- JPY hones in on the 105 figure driven by dollar bullish sentiment
- GBP fades below 8750 despite decent eco data as rate decrease fears haunt market
- CHF verticalizes past 1700 in reverse of the EUR/USD
- 13:30GMT – (08:30 AM EST) CAD Industrial Product Price m/m (NOV) Expected 0.0 Previous 0.0 - 13:30GMT – (08:30 AM EST) CAD Raw Materials Price Index m/m (NOV) Expected 0.0Previous 0.0
- 15:00GMT – (10:00 AM EST) USD ISM Non-Manufacturing (DEC) Expected 61.0 Previous 61.3
- 15:00GMT – (10:00 AM EST) USD Challenger Layoffs Expected --- Previous 104.5K
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