Tuesday August 2, 2005 - 03:52:50 GMT
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Tricom Futures and Foreign Exchange -
Forex: It's Turning into a Tog-of-War - USD Strength Vs Sumer Holiday Trading
The USD pared losses on Monday after stronger-than-expected data on U.S. manufacturing and options-related trading partially offset central bank demand for euros in quiet trading. Following a recent pattern, the dollar slipped after the Institute for Supply Management's manufacturing report, with underlying demand for euros from central banks and position adjustments in a relatively thin summer market pushing it still lower. The ISM index rose to 56.6 in July, the highest this year, from 53.8 in June and above economists' forecast rise to 54.5.
The Russian central bank said on Monday it had increased the euro share of its target currency basket and had reduced its dollar share.
Traders have frequently cited Russia as a buyer of euros in recent weeks and months.
Another quiet Asian session, characterised by the USD giving back some of its New York gains, and the EUR having another try at the 1.2240-50 level. We saw during yesterday's trading how the market quickly came off after breaching 1.2250. This level will continue to prove hard to break going into Friday's US employment numbers, and as the Northern summer break continues. As talk continues of central bank EUR buying, and the USD's fails to rally on strong economic data, I think we will eventually see the EUR break above 1.2250, and head for 1.2500 in coming weeks. Similarly, USD/CHF will eventually break below 1.2700, setting the stage for a possible crossover again with EUR/USD, somewhere around 1.2500.
Today’s Economic Releases:
US: Personal Income and Outlays
US: Factory Orders
Today’s Top Trades
· Buy AUD/NZD around 1.1100-10
· Sell EUR/USD around 1.2230, with a stop and reverse at 1.2261
For more ideas send me an email, [email protected]
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