Monday April 25, 2005 - 10:21:26 GMT
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FOREX:US OPEN MARKET POINTS 04-25-05
For Euro-land its “Wait and See”
German business confidence, as measured by the IFO Institute survey declined to a 19 month low dragging the EUR/USD back through the psychologically important 1.3000 level in active European trade tonight. The Business Climate index registered a reading of 93.3 vs. expectations of 93.5, but more importantly the index for future expectations declined to 93.5 from 94.0 projected indicating that business conditions are not improving. No doubt high oil prices have crimpled demand stalling the economic recovery and putting most German businesses into what IFO’s economist Gernot Nerb called a “wait and see mode”. Mr. Nerb noted that many companies that have been hiring have stopped doing so as they assess the current demand going forward. Although, high oil and higher euro have hurt the country’s important manufacturing sector, HVB Group economist Anreas Rees pointed out that IFO – which focuses on manufacturing, construction, wholesale and retail sectors - only measures 40% of the country economic output. Mr. Rees stated that the country’s service sectors may in fact be doing better than the current numbers suggest. Traders will have to wait until Thursday’s German employment data and Friday’s Retail Sales reports to get a better gauge of the true state of EZ largest economy. In the meantime. tonight’s poor IFO numbers have squelched any attempt at a euro rally continuation and the market will likely focus on US Existing Home Sales report to see if the US consumer has been seriously hurt by the rising crude prices as well.
In contrast to the euro, the yen remained steady against the greenback still benefiting from the easing of tensions with China after last week’s Prime Minister Kozumi’s apology for Japan’s conduct during WWII. The yen also received a strong boost from comments by China's central bank governor that foreign pressure may speed up a change in the yuan revaluation. Although upon further examination traders realized that BOC governor was providing little new information as he offered no exact timetable or specific details as to the nature of the possible revaluation, the mere possibility of yaun revaluation has put a firm bid underneath the yen and the currency may continue to enjoy further relative strength in the near term.
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