Monday July 25, 2005 - 10:28:05 GMT
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Mellon Bank Foreign Exchange - https://fx.mellon.com/
Forex: Mellon FX Daily - European EditionKey Points
• EUR-USD should bounce a little this week if further data improvements are seen in Europe.
• JPY rally fades as market sees steady CNY rate over the next few months.
• This week’s UK data will need to be quite weak to hurt GBP further.
• US existing home sales the only data feature today.
drifted lower on Friday afternoon, but the prospect of some further data improvements in the Eurozone this week should offer support today. Technically, there is an outside chance of a test closer to the 1.20 level, although supports at 1.1995 and 1.1950 need to break to suggest a possible threat to the lower end of the range and key levels at 1.1868 and 1.1759. This may be difficult to achieve ahead of the US ISM and employment reports due out next week and some upside could be seen this week if further data strength is seen in the Eurozone. Business climate indicators for the main Eurozone countries are due this week. 1.2260 is the main level on the topside. US GDP and durable orders data are the main features in the US.
has given up more of the rally seen after the CNY reval. The Chinese central bank acknowledged over the weekend that last week’s reval was just an initial step, although the market is becoming accustomed to the idea that further moves may be some months away. However, some support should still be around for the JPY and 112.00-50 should offer some resistance on USD-JPY.
There is more data out of the UK
this week (mortgage approvals and consumer confidence being of central importance) and this will further influence the debate on policy ahead of next week’s MPC meeting. Strong rather than weak data may prompt the greater market reaction given the amount easing already discounted in the money market.
has called a general election for September 17, although the move was generally expected and had little impact on the NZD. Key focus this week is on the RBNZ statement to see whether they alter the hawkish stance adopted at recent meetings. Rates are likely to be left unchanged again.
existing home sales is the only data feature today and
with bond yields having remained fairly low there does not
appear to be any immediate threat to housing activity. The chart
on the right shows that the multi-year uptrend has continued in
Data/event EDT Consensus*
DE CPI states (Jul, prel) m/m from today +0.3%
US Existing home sales (Jun) 15.00 7.15m
JP CSPI (Jun) y/y 23.50 -0.5% last
AU NAB business survey (Q2) 02.30
Latest data Actual Consensus*
DE Import prices (Jun) y/y +4.4% +3.3%
* Consensus unless stated
2005, Mellon Financial Corporation Note: Although obtained from sources believed by us to be reliable, Mellon Financial Corporation and its affiliates cannot guarantee the accuracy or completeness of the information upon which this report is based. This report does not purport to disclose the risks or benefits of entering into particular transactions and should not be construed as advice in any specific instance. The views in this report constitute our judgement as of this date and are subject to change without notice.
Ian Gunner 44 20 7163 5996 06.40 EDT Monday May 31 2005
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