Thursday March 17, 2005 - 11:44:20 GMT
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FOREX: US OPEN MARKET POINTS 03-17-05
Euro- Pause or Turn?
Massive record Current Account deficits, oil at $57/bbl in overnight trade and to add insult to injury a puny front page picture on the cover of this week’s Newsweek with the headline – “The Incredible Shrinking Dollar”. Can the greenback get any respect? And yet despite the steady stream of dollar bearish data the EUR/USD has failed to make any further progress trading well off the highs set in New York yesterday.
One possible reason for the lethargic price action is the lackluster economic data. The major release of the night – European Industrial Production - which the market expected to jump 1.2% only increased 0.5% on a month over month basis. Higher oil costs and stronger currency weighed on the January results. With oil hitting record highs, that trend is only likely to exacerbate, hurting EZ growth going forward.
The key question facing the FX market now is whether this is simply a short term pause that refreshes the month long euro rally or whether the unit faces very stiff resistance at further gains. We are always reluctant to cite past examples as guidelines for future trades since in the FX market history never repeats itself quite the same way twice, but a quick look at the long term chart shows a very similar move in pair at the beginning of 2004 when it made a double top before ranging for better part of the year. Though US fundamentals certainly appear troublesome especially in view if the rising oil prices, the EZ economy is faring much worse and this dynamic may prevent the pair from making new highs, at least until significant new information becomes available to the market.
FX Spot Overnight
- EUR disappointing IP data pushes euro below 3400
- JPY at 104.35 in very quiet trade
- GBP range-bound at 9240 after muted Retail Sales
- CHF hangs to 1560 awaiting SNB decision
- Upcoming Events
- 13:00 GMT – (08:00 AM EST) CHF SNB Rate Decision Expected 0.75% Previous 0.75%
- 13:30 GMT – (08:30 AM EST) CAD International Securities Transactions Jan Expected C$1.0B Previous C$3.9
- 13:30 GMT – (08:30 AM EST) USD Initial Jobless Claims (Mar 12) Expected 315K Previous 327K
- 13:30 GMT – (08:30 AM EST) USD Continuing Claims (Mar 5) Expected -- Previous 2703K
- 15:00 GMT – (10:00 AM EST) USD Leading Indicators Feb Expected 0.1%Previous -0.3%
- 17:00 GMT – (12:00 PM EST) USD Philadelphia Fed Survey (Mar) Expected 20.0 Previous 23.9
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