Thursday February 3, 2005 - 11:17:01 GMT
Share This Story
INVESTICA Ltd - www.investica.co.uk
Dollar offers little value
The markets are not expecting any Chinese currency moves over the weekend and this will erode immediate yen buying interest. There is, however, a small chance that there will be a policy shift in which case the yen would be likely to strengthen sharply. In view of this risk, even though there is only a small chance of a policy change, there is little incentive for buying the US currency.
The dollar dipped to a low of 103.4 ahead of the US Federal Reserve meeting, but the yen was unable to sustain the move and it weakened to 104.20 in early Europe on Thursday. The NIkkei index dipped slightly on Thursday and this will not provide any near-term yen support while there will also be some caution over the Japanese economy.
The yen was again undermined to some extent by Euro buying against the yen as Japanese investors moved into European bonds and there was also evidence of dollar buying by trust banks. There is still likely to be exporter selling above the 104.25 level and also on any further move higher to 104.5 and this pent-up selling pressure will certainly limit the potential for dollar appreciation.
G7 meetings will remain a significant focus, although markets have started to tire of the issue after concentrating on it for so long. An unchanged policy is the most likely outcome, but there is a small chance of a Chinese policy shift given that they have been successful in dampening expectations of a move. There is, therefore, a small chance of sharp yen gains next week and the markets still need to focus on the issue, especially as it will be a very important medium-term issue.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."