Friday June 24, 2005 - 10:45:11 GMT
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Euro Briefly Below 1.2000
The EUR/USD plunged through the psychologically important 1.2000 barrier but almost instantly rebounded, providing euro bears with less time that it takes to get a New York parking ticket to cover their shorts. The 1.2000 break was interesting not only for its brevity but because it occurred during Tokyo trading hours which is typically the least volatile session of the day. The trade around 1.2000 centers on speculation that ECB will be forced to cut rates as EZ growth comes to a standstill. However, today’s relatively firm German CPI data, along with the fact that oil continues to hold the $60 handle is tempering any expectations of an immediate move and providing some small support to euro bulls.
The key economic event of the day is US Durable Goods expected to print at 1.0%. Whisper numbers on dealing desks have pegged the figures as high as 3.0%, so an in-line result id likely to be a major disappointment to dollar longs who continue to argue that US economic growth remains robust especially in comparison with the other G-3 economies. Should the Durable Goods report materially exceed expectation it may provide enough fuel to retest the 1.2000 break during the much more active US trading session. However, if the Durable Goods data, much like most recent US economic data, disappoint, then perhaps a “reality readjustment” in market’s outlook will commence.
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