Wednesday February 9, 2005 - 10:40:01 GMT
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FOREX: US OPEN MARKET POINTS 02-09-05
Euro Slide Done for Now; Pound Hits Trifecta
Of course, no sooner had the consensus pronounced the euro dead, then the currency started a rally against the greenback. Nothing caught our attention more than a report by Bloomberg yesterday that Dresdner Kleinwort Wasserstein ‘s client base went from being 47% net short euro two weeks back to 83% net short euro last week. Few sentiment gauges offer such clear cut indications of a near term bottom. The latest readings from our proprietary Speculator Sentiment Index are inconclusive but we will be interested to see what the data will reveal from our once a week sample tomorrow.
Meanwhile the FX market is busily engaged in the “reinterpretation” of the interpretation of the Greenspan’s Friday morning speech. The catalyst is John Berry’s column on Bloomberg which concludes that contrary to popular opinion, the Chairman was not genuinely optimistic about US’s ability to curb the twin deficits but was himself rather concerned about the myriad of uncertainties surrounding the issue. The Fed chief, concluded Mr. Berry, simply “put his best face on” on a what is still a vexing problem for the US economy. Mr. Berry’s analysis combined with a complete news vacuum on the US economic calendar, and supported by the first piece of good news out of the Euro-zone in a week (yesterday’s better than expected German Industrial Production numbers), all combined to lift the euro back up to the 2800 figure.
The news of the night came from UK where the pound bulls hit trifecta as Industrial Production, Manufacturing Production and Trade Balance all registered better than expected results. Most notably Manufacturing gained 1.1% year over year against an expectation of only 0.1% as global demand boosted exports. Additionally, December’s Industrial Production was revised upward to 0.4% from 0.2% strengthening cable bulls argument that UK economic slowdown is over. While this data is unlikely to force the Bank of England into raising rates higher, it will certainly quell any speculation about a near term rate cut. It looks like for the time being the pound has found support at the 1.8500 level and may now try to mount a rally back to the 1.9000 figure.
FX Spot Overnight
- EUR finds support and tries to trade back to 2800 figure
- JPY retraces back to 105.50
- GBP blasts through 8600 as eco data all good
- CHF strengthens against euro on Swiss M and A activity
-13:30GMT – (08:30 AM EST) USD MBA Mortgage Applications (Feb $) Expected ------ Previous 7.3%
-13:30GMT – (08:30 AM EST) GBP NIESR GDP Estimate Jan Expected ------ Previous 0.4%
-15:00GMT – (10:00 AM EST) USD Wholesale Inventories Dec Expected 0.9% Previous 1.1%
-15:00GMT – (10:00 AM EST) USD Wholesale Sales Dec Expected ------ Previous 0.7%
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