Friday July 29, 2005 - 02:19:22 GMT
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Tricom Futures and Foreign Exchange -
Forex: We're at the Crossroads today - Can the EUR break the downtrend??
Gold bullion moved to its highest in two weeks on Thursday afternoon in Europe due to a weaker dollar, as investors hesitated in adding to positions ahead of Friday's U.S. economic growth data. The euro was drawing some strength from modest enthusiasm for recent European economic data while also benefiting from dollar investors sitting on the sidelines ahead of the U.S. gross domestic product report scheduled for Friday.
Looks like a big day/night ahead in the financial markets - we have US GDP, followed by Michigan Consumer Sentiment, and then Chicago PMI to round it off. The most likely scenario will be a mixed bag of signals, which will result in a choppy trading session.
So far this morning trading has been largely uneventful with slight USD softness, probably largely attributed to the last of the longs getting out ahead of today's data. The EUR/USD is close to a down trendline which comes in at 1.2160 today, a break above 1.2160-80 it will signal an end to the recent downtrend. Similarly in the USD/CHF, the uptrendline dates back to April and shows support around 1.2845. A break below 1.2830-20 will suggest the recent USD strength has come to an end. I think the trendlines will hold, and the USD will resume its uptrend, while the EUR will continue to break down, targeting 1.1800 in coming weeks.
In a GoldmanSachs report out today, they say: "Homeland Investment Act (HIA) flows likely to be important USD support in coming months. US firms could repatriate more than $300 billion, of which about 30% likely to generate FX flows; says repatriation only began in earnest in mid-May and deadline for majority of transactions is end-2005; adds most of flows likely vs European crosses, resulting in selling of EUR/USD in particular; viewed in isolation, HIA flows sufficient to cause fall of roughly 5 big figures in EUR/USD." Obviously, view this report with the thought that Goldman's maybe talking their book.
Today’s Economic Releases:
US: GDP (Q2)
US: Michigan Consumer Sentiment
US: Chicago PMI
Today’s Top Trades
· Buy AUD/NZD around 1.1100-10
· Sell EUR/USD around 1.2140-50, stops above 1.2180
· Buy USD/CHF around 1.2845, with stops under 1.2800
For more ideas send me an email, firstname.lastname@example.org
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