Friday July 22, 2005 - 11:32:56 GMT
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Yen and Euro Consolidate as Data Caps Gains
Disappointing economic news out both Europe and Japan kept the euro and the yen contained in European trade tonight, unable to further capitalize on yesterday’s surprise of yuan revaluation announcement. In Japan the Tertiary Index – a measure of the country’s services sector- slipped more than expected registering a -1.5% month over month decline against expectations of –1.3%. This the 3rd month out of 4 that the Tertiary data has produced a negative result, sowing seeds of doubt in the yen bull argument that Japan’s economy is on a path to recovery. Meanwhile in the Euro-zone new Industrial Orders numbers printed dismal values as the month over month figures fell –1.5% - and worse - the year over year numbers came in –3.3%. The market instead was looking for monthly gains of 0.9% and a year over year decline of only -2.5%. The news was tempered by significantly higher revision in April data, but still it offered no support to euro bulls whatsoever.
With US calendar empty, the majors may continue to trade in narrow ranges as dealers thoughts turn to the week-end in the country or at the beach. Yesterday yuan news was certainly bullish for the yen as we noted in out Instant Insight report, but with 24 hours having passed, the renewed threat of terrorism in UK and tepid eco data results, the markets seem to be in need of a pause and reflection.
FX Spot Overnight
- EUR trades narrow range round 2150
- JPY hangs below 110.00 as Tertiary data weak
- GBP holds the 7500 figure with GDP results in line
- CHF at 2850 with terror problems offering little support
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