Thursday August 11, 2005 - 04:19:31 GMT
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Tricom Futures and Foreign Exchange -
Forex: Somebody please tell Japan the price of Crude Oil.
The dollar dropped against a rallying yen on Wednesday as a strong domestic stock market and subsiding apprehension over an upcoming election pushed the Japanese currency higher.
After China disclosed the currencies -- including the yen -- in its new reference currency basket overnight, some analysts said the Japanese yen may have got an additional lift. Indeed, China said the dollar would be only one of the four main currencies in the basket, the others being the yen, the euro and the Korean won.
Sterling hit five-week highs against the dollar and one-week highs against the euro after the Bank of England's quarterly inflation report suggested the BOE was not going to be as aggressive in cutting rates as markets had expected. The central bank cut rates by a quarter point to 4.5 percent last week.
Given that Japan imports all its Crude Oil supplies, the ever increasing cost of Crude should be weakening the Yen, however over the last couple of days we've seen USD/JPY actually fall over 200 pips, leading EUR/JPY and GBPJPY lower.
Already today, the EUR has again broken above 1.2400 during Asian trade, as the USD's week long slide continues. Keep in mind that the spread between the EUR/USD and USD/CHF is now only 100 pips. We may see these crossover following tomorrow's US Trade data, or even earlier if today's US retail sales are disappointing.
Volume remains mild as the Northern summer starts to wind-down, and some traders are holding small positions ahead of tomorrow's data. I think for the time being you have to continue to go with the trend of selling USD's, unless we see the EUR get cleaned out back to around 1.2260
Today’s Economic Releases:
US: Retail Sales
US: Business Inventories
Today’s Top Trades
· Buy EUR/USD around 1.2370, with a stop below 1.2330
. Sell USD/CHF around 1.2570, with a stop above 1.2610
. Sell GBP/JPY around 199.10-20
For more ideas send me an email, [email protected]
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