Tuesday January 11, 2005 - 11:20:55 GMT
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FOREX: US OPEN MARKET POINTS 01-11-05
Is the Dollar Doomed by Trade?
Tonight’s news that China registered a whopping 33% gain in exports in December against expectation of only a 25% rise, must give pause to dollar bulls contemplating a lower Trade Balance number tomorrow. While most analysts project a slight decline to -$53.9 Billion for November, given tonight’s data it’s quite possible that any savings from lower oil imports were quickly recycled into additional purchases of Chinese goods, keeping the US Trade deficit at record levels for a second month in a row.
Meanwhile, a decline in oil prices and strong Christmas sales boosted German investor confidence in January and the ZEW survey rose to 29.9 from only 18 expected propelling the euro above the 1.3150 level for the first time since Friday. So far the week is shaping up to be the exact opposite of last as better than expected daily European economic data rallies the euro higher after the unit suffered a 500 point drop during the first week on the year.
Finally, Japan is back. After yesterday’s holiday thinned markets, today’s LEI data - though still below 50 - demonstrated a strong recovery to 30.0 from the low of 18.2 set last month. The news put a bid underneath the yen with the pair trading below the 104 level for the first time this week. Perhaps even more than the Euro-zone, Japan’s economy reaps tremendous benefits from declining oil prices both internally – with more discretionary income available to its consumers and externally – as stronger global demand expands its vital export sector.
FX Spot Overnight
- EUR above 3150 on ZEW boost
- JPY below 104.00 as LEI hints at rebound
- GBP hovers 8780 with little news-flow to drive orders
- CHF stays in uptrend versus dollar at 1740
- 13:15GMT – (08:15 AM EST) CAD Housing Starts (DEC) Expected 230.0K Previous 238.2K
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