Monday May 31, 2004 - 20:19:18 GMT
Share This Story
DailyFX.com - www.dailyfx.com
Dollar Yen Holds Below 110 in Thin Trading
· Weekend terror attacks in Saudi Arabia attributed to al-Qaeda send EURUSD higher in Asian trading
· Yen trades higher despite lack of Nikkei support
· Canada Q1 GDP disappoints, 0.6% q/q on expectations of 2%
While news of a weekend terror attack in Saudi Arabia lent some support to the single currency in Asia, EURUSD traded in a lackluster 40-pip range during the New York session with the US and much of Europe on holiday. Italian PPI was the only data release of note, printing slightly higher than consensus estimates (0.5% m/m vs. 0.4% expectations). With the dollar providing direction to the pair, disappointing US data this week could send EURUSD higher in a continuation of last week’s uptrend. Tomorrow’s ISM release and Friday’s important nonfarm payrolls number will likely be key dollar drivers this week. In the Euro area the market will focus on the ECB rate decision (no change expected) and Ecofin meeting for euro-specific developments.
In thin holiday trading, USDCHF traded briefly below 1.2500 early in New York before rallying above 1.2550 by late morning and consolidating around the 1.2540 level in the afternoon. Although Swiss data had been increasingly positive recently, led by the notably large upside surprise in the KOF leading indicator, Friday’s poor GDP reading put an end to the streak. As a result, building expectations in the market of monetary tightening have eased somewhat, with a June rate hike likely off the table. CPI this week could re-shift market sentiment, but the possibility is remote given softer price data lately. Speeches by SNB Chairman Roth and board member Hildebrand this week could shed light on the timing of the central bank’s upcoming tightening cycle.
With little news to speak of and illiquid trading conditions, cable traded lower during the New York session, falling from a high of 1.8375 to below 1.8300 before retracing slightly. Sterling appears set to continue its move higher once normal trading resumes, given its large and expected growing interest rate advantage over the dollar. Friday’s record mortgage lending figures illustrate that BoE tightening to this point has yet to rein in the housing market and/or credit growth. With MPC members sending faint signals of a 50-basis point hike next week, policymaker comments leading up to the June 10 meeting will be given special notice by the market. Data-wise, manufacturing PMI and consumer credit should be the key market-movers.
USDJPY dipped below 110.00 support Monday in Asia, testing 109.00 by London’s afternoon and finishing in New York roughly 30-pips higher. Comments by the BoJ’s Iwata helped push the yen higher despite a falling Nikkei, as he observed that while current monetary policy will remain in force, consumer prices may fall less than the central bank had originally forecast, suggesting that deflation in the region may end sooner than expected. With fundamental forces pushing USDJPY lower, the Ministry of Finance announced Monday that it refrained from intervening in the foreign exchange market for the second month in a row after record intervention last year and in the first quarter. A dearth of Japanese data this week will put the focus on US releases, although Japanese leading indicators on Friday may provide fresh market movement.
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."