Thursday June 2, 2005 - 10:07:21 GMT
Share This Story
INVESTICA Ltd - www.investica.co.uk
Dollar yield support at risk
The Euro weakened to lows of 1.2160 late on Wednesday, but the Euro managed to recover on Thursday back to 1.2260. The Euro is heavily over-sold on a short-term view and there is, therefore, the potential for a correction, but it will be much more difficult to reverse negative sentiment.
The US data was weaker than expected with the national ISM index for the manufacturing sector weakening to 51.4 in May from 53.3 the previous month while the employment indicator weakened to below the 50.0 level. Dallas Fed Governor Fisher stated that the US Fed could be near the end of its tightening programme even though he warned over some inflation risks. His comments suggested that there could be only one more rate increase and this could force a significant shift in rate expectations. In different circumstance, this combination could have weakened the dollar sharply, but the markets are not in a mood to listen at present. The longer-term dollar risks should, however, not be forgotten. A weak payroll report on Friday could force a reassessment of the situation and tend to weaken the dollar.
The ECB is likely to leave interest rates unchanged on Thursday, but the press conference will be potentially very important for the markets. In particular, there will be speculation over a hint towards lower interest rates or a downgrading of growth prospects. The Euro will be vulnerable to some extent if there are hints that a rate cut could be considered.
There will be speculation that talk of a break-up of EMU will discourage global central banks form diversifying into the Euro and this could have significant implications for the Euro. The pessimism is over-done at present, but confidence will be subdued until there is evidence of a stronger Euro-zone economy.
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."