Thursday August 18, 2005 - 07:47:21 GMT
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Tricom Futures and Foreign Exchange -
Forex: Where are all the USD Bears??
The dollar briefly struck a two-week high against the euro on news that US producer prices rose a larger-than-expected 1.0 pct in July due to higher prices for automobiles and gasoline
Adjusted to exclude volatile food and energy costs, the core rate of inflation at the wholesale level rose 0.4 pct with half the gain in the core PPI rate due to car and truck prices. Both surprised to the upside. Economists had expected the PPI to rise 0.5 pct in July, and the core rate to increase by 0.1 pct.
Meanwhile, the pound rose as the prospect of UK rate cuts in the coming months receded following the publication of the minutes to the last meeting of the Bank of England's Monetary Policy Committee
The minutes of the August rate-setting deliberations, which delivered the UK's first rate cut in two years, took markets by surprise. The majority of 5-to-4 was closer than expected, with the surprise factor exacerbated by news that the BoE's governor Mervyn King voted against the quarter point rate cut in the key repo rate to 4.50 pct
Expectations of more rate cuts this year had already been scaled back when it was revealed this week that the CPI measure of inflation vaulted alarmingly above 2.0 pct to 2.3 pct in July.
- Hearing good size bids around 1.2260, with equally large stops under 1.2240
- US second tier data out later today, should cause the market to temporarily stop, but its impact should limited
- UK retail sales out in about 60 mins, have been strong of late, expecting this trend to continue. Look to buy dips in GBP to around 1.8020-40.
Today’s Economic Releases:
UK: Retail Sales
US: Philly Fed Survey
US: Leading Indicators
Today’s Top Trades
· Buy EUR/USD around 1.2265-75, with stops under 1.2230
. Buy GBP/USD around 1.8040-20, with stops under 1.7990
. Sell USD/CHF around 1.2620-30, with stops above 1.2675
For more ideas send me an email, [email protected]
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