Monday August 8, 2005 - 04:43:26 GMT
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Tricom Futures and Foreign Exchange -
Forex: Will The US Fed be able to Resuscitate the USD this week?
The dollar rallied against major currencies following the release of stronger-than-expected US employment data
Official data showed US non-farm payrolls rose by 207,000 in July, above analysts' forecasts for a rise of around 183,000. Payrolls for May and June were also revised higher by a cumulative 42,000, while the unemployment rate remained at 5 pct, the lowest in 47 months, the data revealed
The dollar rallied after the data, but failed to take the euro below yesterday's low of 1.23.
Elsewhere, the yen continued to weaken on political concerns, falling to three-and-a-half month lows against the euro and over one-month lows against the pound ahead of parliament's vote on Japanese postal reform early next week
If the ruling LDP party fails to get the bill through parliament, Prime Minister Junichiro Koizumi has threatened to call a snap election. "If the vote is carried, the yen is likely to pick back up again, but if not the market will start to fret about political uncertainty and it could see a sharp move downwards.
The USD's failure to go on with it after Friday's somewhat firm data was as we expected, and should now signal an end to the recent recovery in the greenback. The market is almost unanimous about Tuesday's Fed meeting in expecting a 25bps hike. The market's attention will focus this week on Friday's US Trade data.
So far today, the EUR has managed to find support around 1.2330-20, most attention has been on the Monetary statement from Australia's central bank, in which the bank suggested no further rate rises this year. The AUD has come off quickly as a result. Elsewhere, the Japanese postal vote has failed, causing the Yen to come off sharply immediately after the news. The Japanese PM had threatened he would call elections if such a result occurred.
Today’s Economic Releases:
UK: PPI (July)
Today’s Top Trades
· Buy EUR/USD around 1.2310, followed by 1.2280-60.
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