Wednesday June 15, 2005 - 03:31:04 GMT
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Tricom Futures and Foreign Exchange -
Forex: Notice to the PBOC: We know what your upto
The market's awaiting China to revalue its currency, like it's the coming of Messiah, but i can see the market being sorely disappointed. Knowing Chinese thinking, they won't be pressured into a revaualtion, nor will they do as much as the market expects. If you were China, and you were in such a powerful trade position, would you give it all up in one foul swoop? I think not.
Later today, we have a slew of economic data out of the US, with the likelihood that it will give the market mixed signals as to the Fed's next move. However, given the way the market shrugged off yesterday's soft inflation and sales data, you would expect that it doesn't matter how bad the numbers are, the USD will still rally.
The USD continued its march higher on Tuesday, recording fresh nine-month highs against the euro as soft U.S. economic data failed to alter the market's view that the Federal Reserve would keep raising interest rates.
The dollar's recent gains have put it firmly in bullish territory on the technical front as well, leading traders to shrug off potential setbacks like the below-forecast U.S. retail sales and producer price data released Tuesday.
Traders said options-related selling also weighed on the euro, with the psychologically key $1.20-mark a target.
U.S. producer prices sank a steeper-than-expected 0.6 percent in May, the biggest drop in over two years. Core PPI, which excludes the more volatile energy and food items, rose a tepid 0.1 percent.
Retail sales fell 0.5 percent last month, the largest decline in nearly a year due to a cutback in auto and clothing purchases. Excluding the volatile autos sector, retail sales dropped 0.2 percent. But analysts say these numbers are unlikely to divert the Federal Reserve from its path of raising interest rates to what it deems to be more normal, neutral levels.
The euro has fallen 11 percent against the dollar so far this year, due to sluggish economic growth in the euro zone compared with the United States, and concerns about political cohesion in the region after French and Dutch voters rejected the European Union constitution.
Today’s Economic Releases:
· US: CPI
· US: Empire State Manufacturing Index
· US: TIC Data
· US: Industrial Production
Today’s Top Trades
· Buy USD/CHF on dips to 1.2750
. Sell EUR/USD around 1.2050-60
. Buy AUD/NZD on dips to 1.0760-70
. Buy USD/CAD around 1.2490-00
. Sell GBP/USD around 1.8100-15
For more ideas send me an email, [email protected]
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