Wednesday July 6, 2005 - 10:07:50 GMT
Share This Story
INVESTICA Ltd - www.investica.co.uk
Euro battling for correction
The Euro temporarily dipped below 1.1880 and tested support at 1.1865 during Tuesday, but the Euro managed to resist a decline through this level and the dollar generally fluctuated in a 1.1880-1.1935 range. There is likely to be greater caution ahead of the US payroll report on Friday with a natural inclination to curb long dollar positions.
Underlying dollar sentiment should remain strong in the short term with markets still confident over a series of further US interest rate rises. Bond yield spreads will also continue to offer dollar support and the dollar will attract fresh buying interest if the payroll report is strong.
Oil prices will be watched closely and a sustained rise above US$60 p/b would be likely to weaken the US currency slightly as rate expectations could be damaged. The dollar will also be vulnerable to a bigger correction if there is a weak payroll report on Friday. The factory orders report also recorded weakness in underlying investment levels which will be a concern. These longer-term doubts should not be ignored and could be important for the dollar later in the third quarter.
The Euro-zone interest rate policy will be an important short-term focus. There were reports during Tuesday that the ECB had rejected the possibility of a cut in interest rates. It is certainly the case that monetary conditions have been eased considerably by the Euro's depreciation and the ECB will also be concerned over high oil prices. A near-term move to cut rates looks unlikely.
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."