Wednesday January 12, 2005 - 11:33:35 GMT
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FOREX: US OPEN MARKET POINTS 01-12-05
Will Dollar Reach 1.30?
The most fascinating aspect of FX trading today will be the battle between dollar bulls and bears to tag the 1.3000 figure should the Trade Balance print at or below expectations of -$53.9 Billion. After all, whether US Trade Balance hits -$53.9 Billion or the more bearish calls of -$55 Billion matters little in the broad context of increasingly weak US Balance Sheet position. However, as weve been noting from the beginning of the week, the 1.30 figure is an extremely tempting target for dealers looking to take out the large amount of stops clustered around that psychologically important number.
Most FX analysts expect to see an improvement in the numbers due to a significant decline in the price of oil which constitutes such a large part of US imports. However, as we pointed out yesterday, given the large jump in Chinese exports its 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.
Unless the number is extraordinarily bullish (less that $50 Billion) we stick to our view that most the rally in the dollar is done for now, as Japanese and European data continues to improve or stabilize while US Balance Sheet problems persist. In short, while the 1.30 level could easily fall under the pressure of a dealer stop hunt, the euro is likely to find support shortly thereafter.
FX Spot Overnight
- EUR slightly below 31 at 3094 awaiting US Trade data
- JPY at 103.31 as eco data continue to show a rebound
- GBP hovers 8730 although Visible Trade Balance improves
- CHF stays quiet at 1830
- 13:30GMT (08:30 AM EST) USD Trade Balance (NOV) Expected-$53.9BPrevious $55.5B
- 13:30GMT (08:30 AM EST) USD Goods and Services Imports (BOP) (NOV) Expected$152.5BPrevious $153.5B
- 13:30GMT (08:30 AM EST) USD Goods and Services Exports (BOP) (NOV) Expected $99.2B Previous $98.1B
- 13:30GMT (08:30 AM EST) CAD New Housing Price Index m/m (NOV) Expected -- Previous 0.2%
- 13:30GMT (08:30 AM EST) CAD Int'l Merchandise Trade (NOV) ExpectedC$4.5B Previous C$4.4B
- 13:30GMT (08:30 AM EST) CAD Merchandise Imports (NOV) Expected -- Previous 0.9%
- 13:30GMT (08:30 AM EST) CAD Merchandise Exports (NOV) Expected -- Previous -1.1%
- 15:30GMT (10:30 AM EST) GBP Leading Indicator Index m/m (NOV) Expected -- Previous 0.3%
- 15:30GMT (10:30 AM EST) GBP Coincident Indicator Index m/m (NOV) Expected -- Previous 0.1%
- 19:00GMT (14:00 PM EST) USD Monthly Budget Statement (DEC) Expected -$7.0B Previous -$17.6B
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