Monday February 14, 2005 - 12:10:42 GMT
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Forex US OPEN MARKET POINTS 02-14-05
Better Yen Data Sparks a Broad Anti-Dollar Rally
A much better than expected Current Account surplus from Japan triggered a yen rally against the dollar today and the other majors quickly joined the fray as tripped stops further fueled the upward move. Japan reported a Current Account surplus of ¥1616 Billion versus expectations of only ¥1294.0 Billion. The report stood in stark contrast to last Wednesday’s near record Trade Deficit from the US. However. the Japanese news was actually less bullish than the headline number as the large part of the gain came from increased interest and dividend income rather than improvement in trade. Additionally, lower oil prices in December curbed import costs enlarging the surplus. In January, oil prices firmed substantially which will most likely lead to less favorable comparisons next month.
Nevertheless, the price action in European session was all positive for yen and euro bulls as hedge fund buying during the Asian open took out a series of stops in the 1.2930 level forcing dollar longs to cover their positions driving the euro to 1.2970 and the yen to 104.60. The pound meantime skyrocketed nearly 100 points higher as PPI data reported the largest jump in raw mineral costs since 2000 printing at 3.4% versus consensus of only 1.4%.
The majors now find themselves near the top of their most recent range against the dollar facing Tuesdays’ TICS release which is likely to be the key event risk of the week. FXCM’s proprietary sentiment data shows no significant imbalances, leading us to conclude that today’s rally may yet have more upside left if the US eco data disappoints the market. On that front, today’s International Securities Investment data from Japan showed that the country was a small net buyer of US bonds in December, possibly lending some support to a moderately bullish TICS number. The TICS report, however, stands only second to NFPs in its ability to completely confound the market as the month to month data is notoriously volatile. For that reason it may be wiser to await the numbers before drawing any firm conclusions about direction of FX trading this week.
FX Spot Overnight
- EUR blasts to 2970 on back of positive JPY data
- JPY drives deep into the 104 figure off good CA news
- GBP takes out 8800 for first time in two weeks as PPI inputs soar
- CHF breaks 2000 on general anti-dollar sentiment
13:30GMT – (8:30 AM EST) CAD New Motor Vehicle Sales m/m Dec Expected –2.0% Previous –3.1%
13:30GMT – (8:30 AM EST) CAD Manufacturing Shipments m/m Dec Expected 0.4% Previous 0.2%
15:30GMT – (10:30 AM EST) GBP Leading Indicator Index m/m Dec Expected Previous –0.4%
15:30GMT – (10:30 AM EST) GBP Coincident Indicator Index m/m Dec Expected Previous 0.1%
- 19:30GMT – (14:30 PM EST) GBP RICS House Price Balance (Jan) Expected -33 Previous -37
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