Wednesday May 18, 2005 - 09:49:35 GMT
Share This Story
INVESTICA Ltd - www.investica.co.uk
Dollar resistance will increase
The Euro failed to sustain a move through 1.2650 against the dollar and the Euro weakened back to 1.2605 in New York on Tuesday. After a dip below 1.26, the Euro pushed back above this level in early Europe on Wednesday, but was unable to make significant headway.
The US data was mixed and failed to offer clear direction. The headline producer price figure was stronger than expected at 0.6% for April while the underlying rate was also slightly above expectations at 0.3%. This will maintain some concerns over inflation, although the consumer inflation report will tend to be more important on Wednesday. A strong CPI report would reinforce expectations of a more aggressive Fed policy, especially if the underlying monthly increase is 0.4% or higher.
There was a strong increase in housing starts for April, while the industrial production report was weaker than expected with a 0.2% monthly decline. Both these factors will have been influenced by warm weather which cut utility output and boosted construction. Despite longer-term doubts and uncertainties, overall confidence in the economy will still remain stronger in the short term which will underpin the dollar.
There will also be further speculation over a covering of short dollar positions taken out to fund positions in commodity markets. There are also likely to be further rumours of difficulties within the hedge-fund community which will encourage a covering of high-risk investments. The dollar will, however, need a flow of favourable news to offset the influence of underlying central bank dollar selling and sustained risk aversion would not offer support. The US currency will also be vulnerable to a sharp correction if there is a build up in long dollar positions and the spot rate fails to make further ground.
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."