Wednesday January 19, 2005 - 11:31:12 GMT
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FOREX: US OPEN MARKET POINTS 01-19-05
Dollar’s Done - Euro Runs
The TICS data was positive but the dollar rally quickly lost steam after the third test of the 1.3000 figure found strong support at the level. The TICS report, despite printing much better than expected $81B versus $55B, did not inspire a further rally in the FX market as traders focused on troubling details instead -- the paltry buying patterns of Japanese (only $700M in November) as well the 2nd straight month of liquidation from the Caribbean region indicating that hedge funds are longer buying bonds.
Is the market speculating that US growth has peaked? Perhaps. Certainly if the universal consensus that US rates will rise materially this year is correct, then GDP growth could indeed contract as both consumers and producers will face the burden of higher credit costs. Housing, which we have watched like a hawk – and which so far hasn’t budged and inch – may be the first victim of the new higher interest rate regime. To that end, today’s Housing Starts and Building permits data may resonate more strongly than usual, especially if the numbers miss to the downside.
Latest eco data is definitely giving dollar bulls some pause. Yesterday’s Empire Manufacturing report which registered at only 20 vs. 27 expected must be worrisome to traders speculating on continued US growth, especially so because the new orders component dove to 21 from 36 last month. The Empire is notoriously volatile but another piece of data appears to be confirming some softness in the US economy. The weekly ABC Consumer Confidence survey while not nearly as famous as its monthly brethren from Confidence Board and University of Michigan is nevertheless just as accurate. Yesterday it reported –11 against –9 projected which was the lowest value in 3 months. Whether these data points are early clues or just typical market noise remains to be seen, but for now the dollar rally is done while the euro starts another upward run.
Finally, just as analysts were preparing a eulogy for cable, UK eco data bounced back with a vengeance reporting much stronger than expected reduction in unemployment rolls (-6.1K vs. –1K projected) and quelling any fears that BOE would lower rates anytime soon. The pound rallied above 1.8800 for the first time in nearly two weeks.
FX Spot Overnight
- EUR bounces from 3000 and targets 3100 as USD rally loses steam
- JPY quiet at 102.50 with no economic releases from Japan
- GBP UK unemployment rocks and pound takes out 8800
- CHF back below 1800 on USD weakness
- 12:45GMT – (07:45 AM EST) USD ICSC-UBS Expected ---- Previous -0.6%
- 13:00GMT – (08:00 AM EST) CAD Consumer Price Index m/m Dec Expected -0.1% Previous 0.4%
13:00GMT – (08:00 AM EST) CAD Consumer Price Index y/y Dec Expected 2.3% Previous 2.4%
13:30GMT – (08:30 AM EST) CAD International Securities Transactions Nov Expected - C$2.2 Previous C$2.2
- 13:30GMT – (08:30 AM EST) USD Consumer Price Index m/m Dec Expected 0.0% Previous 0.2%
- 13:30GMT – (08:30 AM EST) USD CPI Ex Food & Energy m/m Dec Expected 0.2% Previous 0.2%
- 13:30GMT – (08:30 AM EST) USD Consumer Price Index y/y Dec Expected 3.4% Previous 3.5%
- 13:30GMT – (08:30 AM EST) USD CPI Ex Food & Energy y/y Dec Expected 2.3% Previous 2.2%
- 13:30GMT – (08:30 AM EST) USD Housing Starts Dec Expected 1905K Previous 1771K
- 13:30GMT – (08:30 AM EST) USD Building Permits Dec Expected 1985K Previous 1988K
- 13:30GMT – (08:30 AM EST) USD Housing Completions Dec Expected ---- Previous 1705K
- 13:30GMT – (08:30 AM EST) USD Initial Jobless Claims (JAN 15) Expected 345K Previous 367K
- 13:30GMT – (08:30 AM EST) USD Continuing Claims (JAN 8) Expected 2675K Previous 2631K
- 13:30GMT – (08:30 AM EST) USD Redbook Expected ---- Previous 1.1%
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