Wednesday June 15, 2005 - 10:54:24 GMT
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Dollar Day of Judgment
After trading up to 1.2070 in early European session, the euro once more ran out of gas and retraced back the 1.2040 level. Market sentiment remains extremely euro- bearish as focus turns to the July 16th EU finance ministers meeting where hard choices regarding the EU budget will have to be made. Yesterdayís meeting between Tony Blair and Jacques Chirac did not resolve the issue of UK rebate which Mr. Chirac sought to partially rescind. Overall the EU economic and political situation remains rudderless as leaders still try to address the crisis of confidence that has gripped the continent in the wake of rejection of the EU constitution.
Yet, while Europe is floundering, US is hardly a bastion of strength and stability these days. With Trade Deficits still hovering at record highs, surprisingly poor retail sales, anemic employment gains and a manufacturing sector on the verge of contraction itís difficult to make an impassioned case for dollar longs. Today, a slew of US eco data including Empire Manufacturing, CPI and the very important TICS report should offer better clues to the state of the US economy. Up to now the dollar has absorbed poor fundamental news with little adverse effect, but if the news continues to paint a weakening picture of the US economy, the unitís impressive rally of the past 2 months may come to a crushing halt.
FX Spot Overnight
- EUR consolidates at 2050
- JPY back to 109.40 after testing the 109 figure
- GBP loses the 8100 figure as employment data is soft
- CHF hangs at 2770 focused on SNB decision
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