Tuesday May 3, 2005 - 10:53:50 GMT
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FOREX: US OPEN MARKET POINTS 05-03-05
Euro Grinds Higher
Another mind numbingly boring night in FX markets as Japan remains closed for Golden Week holidays while everyone else awaits the FOMC rate announcement later today. Yesterday, dollar bulls received an unpleasant surprise as ISM Manufacturing printed at 53.3 versus 55 expected. In all fairness manufacturing numbers from across the G-7 have been very weak. Tonight’s UK CIPS Manufacturing report is a case in point. The survey registered a reading of only 49.5 versus 51.5 expected recording the first contractionary result in over 2 years. Nevertheless, the disappointing ISM numbers disrupted the carefully planned assault on yearly lows in the EUR/USD by the dollar longs yesterday and tonight’s PPI data from the Euro-zone which printed at 4.2% on year over year basis, along with a downward revision in EU employment rate to 8.8% from 8.9% provided just enough good news for euro bulls to push the currency higher by about 40 points.
Yesterday we wrote that dollar bulls needed to see three yeses before the end of this week in order to achieve their goal of taking out the 1.2700 barrier. So far the ISM result deprived them of one yes. Today’s FOMC meeting will be another test. If Fed’s language maintains its cautious tone, the market may anticipate a temporary halt to further rate hikes and sell the dollar rather than bid it higher. What initially appeared to be a strong week for dollar bulls is shaping up as just another war of attrition in the FX markets with brutal battles for every pip. The dollar longs may yet have their day in the sun but for now range trading continues to dominate.
FX Spot Overnight
- EUR rallies to 2865 off lows as PPI supports notion of no ECB cut
- JPY hovers near 105 level
- GBP stays weak at 8940 on poor CIPS data
- CHF trades above 2000 as CPI comes in line
- 10:00 GMT – (6:00 AM EST) UK CBI Distributive Trades expected (Apr) Expected - Previous
- 10:00 GMT – (6:00 AM EST) UK CBI Distributive Trades realized (Mar) Expected - Previous
- 14:00 GMT – (10:00 AM EST) USD Factory Orders (MAR) Expected -1.2% Previous 0.2%
- 14:00 GMT – (10:00 AM EST) USD Factory Inventories (MAR) Expected 0.7% Previous 0.5%
- 14:00 GMT – (10:00 AM EST) USD Challenger Layoffs (APR) Expected Previous 108.
- 18:15 GMT – (02:15 PM EST) USD FOMC Rate Decision Expected (MAY 3) Expected 3.00% Previous 2.75%
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