Thursday April 21, 2005 - 10:14:51 GMT
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FOREX:US OPEN MARKET POINTS 04-21-05
The World Slows Down But Euro and Cable Remain Firm
“The US economy is showing some signs of entering a soft patch again because of the oil prices, and that will hurt Japan,” noted Masaaki Suzuki of Mizuho Research Institute in reaction to a smaller than expected Japanese Merchandise Trade Balance surplus. Japanese exports grew at half the pace of last year while imports, spurred by higher oil costs continued to rise. Crude refuses to break the $50/bbl level even as we enter the cyclically slower summer months. Yesterday’s surprise drop in supplies temporarily pushed oil to $53/bbl in New York trade.
Surely as day follows night higher oil prices lead to a slowdown in global growth. More evidence of that fact came from UK where Retail Sales unexpectedly fell to –0.1% from 0.4% projected. Meanwhile French consumer spending declined –0.8% vs. consensus estimates of 0.1% gain. Yet the poor data has not really hurt the euro or the pound as both remain in a clear-cut uptrend against the greenback. During times of global economic slowdown the FX world looks for relative value and trading in currencies becomes a battle for the “least worst” spot.
One unit that has benefited from the recent investor malaise is the Swiss franc which has out performed both euro and pound this week. It seems the gloomier the economic news, the more the world runs to Zurich for safety and peace of mind.
Traders will be better able to gauge just how gloomy things really are after US releases the LEI and Philly Fed data. The market expects poor numbers especially after the horrid decline in Empire Manufacturing last week to 3 from 18 and there is little reason to think otherwise. Nevertheless, given the discounting nature of the FX market traders may be looking more towards the pits of NYMEX rather than the eco data from Washington to determine their next move.
FX Spot Overnight
- EUR stays near 3100 despite lackluster French data
- JPY weaker on narrower Trade Balance
- GBP temporarily hurt by Retail Sales but holds the 9100 figure for now
- CHF at 1770 looking to target yearly lows
- 12:30 GMT – (8:30 AM EST) CAD Retail Sales (MoM) (FEB) Expected 0.7% Previous 2.0%
- 12:30 GMT – (8:30 AM EST) CAD Retail Sales Less Autos (MoM) (FEB) Expected 0.3% Previous 2.4%
- 12:30 GMT – (8:30 AM EST) USD Initial Jobless Claims Expected 326K Previous 330K
- 12:30 GMT – (8:30 AM EST) USD Continuing Claims Expected Previous 2664
- 14:00 GMT – (10:00 AM EST) USD Leading Indicators Expected –0.3%Previous 0.1%
- 16:00 GMT – (12:00 AM EST) USD Philadelphia (APR) Expected 11.4 Previous 15.5
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