Tuesday May 24, 2005 - 11:12:49 GMT
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Forex: MellonFX- Global FX Daily - U.S. Edition
Global FX Daily - U.S. Edition
• EUR-USD steady overnight
• German ZEW and Japanese activity data both disappoint, but neither is terminal.
• Turkish lira withstands German negatives for now, but there could be uncomfortable news flow inm the medium-term.
• US home sales and FOMC minutes feature today.
Another fairly quiet overnight session, with the appetite of the USD bulls seemingly satiated for now. This may extend through this week and next, given the uncertainty about both the\ outcome of the French referendum on Sunday and the way the market will react to it. Furthermore, many market participants will not be around on Monday given market holidays in the UK and the rest of that week will be dominated by the wait for the US employment report (due on the Friday). A 1.2450-1.2690 range should contain activity on EUR-USD
for the remainder of this week – key interim parameters come in at 1.2655 and 1.2535.
survey of analysts and investors was weaker than expected, although the period in question covered a number of changes in sentiment. The survey took place from May 2 to May 23 and the early part of this period would have been dominated by equity weakness and poor economic data. However, as the period developed equities improved, while oil prices and the EUR both weakened. Furthermore, 50 of the 298 replies were received after the German early election call on Sunday and ZEW said that on the basis of these alone the index would have been up on the month rather than down.
The Turkish lira
has held in fairly well thus far in the wake of the announcement over the weekend about an early German election. Unless there is a significant turnaround in popular opinion Germany will be governed by the current opposition CDU in the next few months (September 18 is the most likely election date). The CDU is formally against Turkish EU membership and is expected to campaign on this basis. This could provide an uncomfortable backdrop for the TRY and it needs to stay below 1.4100/50 (against the USD) to avoid further negative fall out. Above 1.3850 would be an initial danger signal. Below 1.33 would set it up positively.
Japanese activity indices
turned out weaker than expected and this may raise a few doubts about whether all of last week’s reported strength in Q1 GDP will survive the revision process. However, while the declines in March and February take back much of the strength seen in January, the averages for Q1 as a whole continue to compare favourably with those for Q4. The all-industry index is up 1.3% in Q1 compared to Q4, while the tertiary index is 1.3% higher q/q.
US – the FOMC minutes come against a background where the twin concerns about softening growth and rising inflation have abated a little in recent weeks. As a consequence the market is generally more relaxed and should be less jumpy when reading today’s report. Furthermore, current FOMC thinking has already been fairly well communicated. Existing home sales data is also due today after a solid few months.
Data/event EDT Consensus
US Chain store sls (w/e May 21) w/w 07.45 -1.0% last
CA Leading indicator (Apr) m/m 08.30 +0.2%
US Redbook sls (w/e May 21) m/m 08.55 +2.5% last
BE Business confidence (May) 09.00 -10.5
US Existing home sales (Apr) 10.00 6.90m
US Minutes of May 3 FOMC 14.00
US ABC consumer conf (w/e May 22) 17.00 -18 last
JP Trade balance (Apr) 19.50 ¥0.9trn
Latest data Actual Consensus
JP Tertiary index (Mar) m/m -1.0% -0.4%
JP All-industry index (Mar) m/m -0.5% -0.3%
DE GDP (Q1) q/q +1.0% +1.0%
FR H’hold consumption (Apr) m/m +1.0% +0.5%
IT Consumer confidence (May) 104.4 104.5
GB Business investment (Q1) q/q -0.1% +0.2% last
DE ZEW expectations (May) 13.9 21.0
EU ZEW expectations (May) 14.8 22.5
EU Trade balance (Mar, prel) €4.4bn €5.8bn
EU Manu orders (Mar) m/m -0.5% +1.5%
* Consensus unless stated
Ian Gunner 44 20 7163 5996 06.15 EDT Tuesday May 24 2005
2005, Mellon Financial Corporation Note: Although obtained from sources believed by us to be reliable, Mellon Financial Corporation and its affiliates cannot guarantee the accuracy or completeness of the information upon which this report is based. This report does not purport to disclose the risks or benefits of entering into particular transactions and should not be construed as advice in any specific instance. The views in this report constitute our judgement as of this date and are subject to change without notice.
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