Tuesday June 28, 2005 - 10:35:50 GMT
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Euro Slides on German “No Confidence” Data
The euro retraced some of the gains from yesterday as German Consumer Confidence numbers printed far worse than expected. The GFK Consumer Confidence came in at 3.5 versus 4.2 projected once again bringing to the forefront concerns about the gloomy state of EU economy. While consumers remained decidedly dour, business confidence in France - Europe’s third largest economy – perked up for the first month in eight as euro’s decline made exports more competitive. Although EU business outlook improved, the cripplingly high oil prices are likely to dampen any recovery in consumer demand and until crude recedes from its highs, the euro may be hampered in any rebound of its own.
Across the Pacific, consumer demand was considerably stronger as Japanese Retail Trade gained 2.7% on year over year basis versus expectations of 2.3%. The Japanese economy continued to demonstrate underlying strength, but here too even more so than with the euro, any yen gains have been suppressed by skyrocketing cost of crude. This week brings an array of important Japanese economic data from employment to CPI to the quarterly TANKAN survey. Just how strong an impact it will have on yen trading will be largely determined by the price action in the NYMEX pits. The 110 barrier has become a critical battle line between yen bulls and bears, but even if the pair manages to pierce that level the move may well be a “bull trap”, for as soon as the price of oil declines the yen may shoot up like an underwater rubber ball released into the air.
FX Spot Overnight
- EUR slides to 2100 on poor Consumer Confidence data
- JPY nears 110 as oil at $61/bbl
- GBP breaks 8200 in general dollar strength
- CHF at 2770 mirroring euro
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