Monday July 25, 2005 - 04:04:51 GMT
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Tricom Futures and Foreign Exchange -
Forex: Now that China is out of the way, what can the market focus on??
I've been away for the last few days, but looking at the screens this morning, it was almost like I hadn't been away. The China "thing" has happened, and as I expected the market reacted instantly, but since Thursday, the Yen has again weakened against the USD and EUR. Also, as expected China did not revalue as much as the market had expected, but then again who really thought China would revalue the Yuan by as much as 10% in one hit.
Looking to today, and the market's started the week slowly with some small USD strength appearing. The economic calendar for the week ahead has little to excite, and with the Northern Hemisphere holidays continuing the market will continue to be choppy, with little in the way of direction.
At this time, i can't see any firm opportunities in the majors - EUR/USD appears to be trading in a wide range of 1.2020-1.2240, interim resistance at 1.2140 maybe a level to look at if you're keen to establish shorts. USD/CHF appears capped around 1.3070-80 for the moment, with good support around 1.2920. I remain positive USD, but would like to give the market another 24 hours to settle down. GBP/USD I think offers better certainty (if a trade can really be certain). The recent bomb blasts in London will work to drive consumer confidence and tourist numbers lower. In addition, we have the BOE meeting next week, at which the market thinks a rate cut will be announced. The UK economy was already slowing down before the terrorist attacks, so the attacks will only have accelerated the slow down, and thus the monetary policy reaction. With this in mind, I think we can look for opportunities to establish shorts in Sterling, possibly around the 1.7450-70 levels, followed by 1.7570-80 if we got up there.
The USD recovered from the previous session's steep losses against the yen on Friday as markets pondered the implications of China's move to drop the yuan's peg against the dollar. Sterling slipped 0.8 percent to $1.7381, with markets cautious about the British pound due to security concerns in London.
U.S. Treasury bonds and the dollar rallied, recovering from Thursday's sharp sell-off following the revaluation of China's yuan currency.
U.S. stocks rose on Friday after energy shares benefited from a jump of more than $1 a barrel in the price of oil. U.S. crude futures for September delivery shot up $1.52 to settle at $58.65 a barrel on NYMEX, buoyed by short covering as traders tracked a potential storm that could disrupt supply.
Today’s Economic Releases:
US: Existing Home Sales
Today’s Top Trades
· Buy AUD/NZD around 1.1140
. Sell EUR/USD around 1.2140
. Buy USD/CHF around 1.2900
For more ideas send me an email, [email protected]
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