Tuesday February 15, 2005 - 11:09:10 GMT
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FOREX: US OPEN MARKET POINTS 02-15-05
Data Blankets the Majors But Euro Dollar Stay in Zone
After a very quiet calendar last night, the FX markets were hit with an avalanche of data from Europe and UK while gearing up for marquee economic release from US. Although the German GDP figures disappointed, registering a loss of –0.2% versus expectations of 0.2% gain, the market shrugged off the news and actually pushed the pair higher as most traders chalked up the contraction to higher oil and higher euro rates in Q4. More recent data out of Germany such as Industrial Production and Factory Orders demonstrated a marked improvement in demand so the FX market chose to look forward rather than dwell on the past.
Euro’ s fortunes were also boosted by the better than expected ZEW survey which printed 35.9 versus consensus of 30.0. The ZEW stated that the gain in the index signals that a “tangible” recovery may be on the way. Overall, the news from Euro-zone was strong enough to keep the EUR/USD at the highs of the week as dealers positioned for the flurry of data due from US including Empire Manufacturing, Retail Sales and TICS.
The most important release on the American calendar is the TICS report from US Treasury due 14:00 GMT. In light of the staggeringly large US Trade deficit reported last week, US needs to attract approximately $55-$60 Billion to even out the books every month. Last months $81 Billion TICS surplus was a significant contributor to dollar’s strength. This month however, many market participants are far less optimistic. Both Calyon and Goldman Sachs expect the capital flows to have decreased materially. Goldman’s estimate is a surprisingly low $45 Billion – far less than the latest Bloomberg consensus of $60 Billion. All the players are keenly aware of the volatility of the data series and preface their analysis with warnings of potential for large margin of error. Nevertheless, with the market seemingly skeptical of a strong TICS report any upside surprise is likely to help the dollar bulls as euro nears resistance at the psychologically important 1.30-1.3100 level. On the other hand, if TICS misses the estimates of even the most bearish forecasts, the pair may resume its uptrend from last year as Current Account concerns will trump all other economic considerations.
FX Spot Overnight
- EUR stays at weekly highs after ZEW data reaffirms positive sentiment
- JPY back below 104 still supported by yesterday trade flow news
- GBP guns for 8900 as CPI remains firm but not troublesome
- CHF trading 1940 as dollar weakness persists
- 13:30GMT – (08:30 AM EST) USD Empire Manufacturing Feb Expected 20.00 Previous 20.08
- 13:30GMT – (08:30 AM EST) USD Advance Retail Sales Jan Expected -0.4% Previous 1.2%
- 13:30GMT – (08:30 AM EST) USD Retail Sales Less Autos Jan Expected 0.4% Previous 0.3%
- 13:30GMT – (08:30 AM EST) USD Business Inventories Dec Expected 0.2% Previous 1.0%
- 14:00GMT – (09:00 AM EST) USD Net Foreign Security Purchases Dec Expected $60.0B Previous $81.0B
- 18:00GMT – (13:00 PM EST) USD NAHB Housing Market Index Feb Expected 69 Previous 70
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