Monday September 5, 2005 - 11:15:00 GMT
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Mellon Bank Foreign Exchange - https://fx.mellon.com/
Forex: Mellon FX Daily - U.S. EditionKey Points
• EUR-USD runs into a little profit taking ahead of US holiday affected Monday session.
• USD remains on the back foot while EUR-USD stays above 1.2485.
• JPY looking good, but much will depend upon how the large undecided voter camp progresses this week.
• Eurozone/UK PMI services data due today.
has traded lower in early European trading, pulling back from the higher levels recorded in Asia. The Asian highs were close to the highs seen on Friday and this has proved attractive for those looking to take some profit from recent market movements.
A 1.2485-1.2590 range needs to break to generate any fresh intra-day direction, although this may prove difficult with the US away on holiday today. The bias on EUR-USD remains to the upside following last week’s move above 1.2485-1.2500, leaving risk to the 1.2650-1.2730 area. These higher levels could be seen in the next week or two, especially if the market also looks at the German election as a possible EUR positive. However, while the market will remain nervous about US growth prospects, ultimately things should settle down and such expectations should stabilise. At this point therefore, these key higher levels should remain intact and a rebuilding of optimism in the US should eventually see the USD strengthening again.
is the currency looking the most able at the moment and a move below 109.05 would suggest more USD-JPY weakness. EUR-JPY would also look vulnerable if a sustained move below 137.00 can be seen. However, with Sunday’s election fast approaching, the key focus this week will be on the opinion polls. The LDP has maintained a sizeable lead amongst those who have made their minds up on how they will vote, but a large amount of voters remain undecided. The market will be looking for the trends in how this undecided camp are progressing during the course of this week and this could have a big impact on market confidence in Koizumi’s ability to achieve a coalition majority and consequently the performance of the JPY.
service sector PMIs are due and market impact is likely to be limited unless they come out weaker than expected. In the case of weaker numbers the market’s current concerns about the high oil price/weak growth scenario will be further aggravated.
Data/event EDT Consensus*
Market Holiday – US, Canada
IT PMI services (Aug) 08.45 49.8
FR PMI services (Aug) 08.50 55.4
DE PMI services (Aug) 08.55 53.4
EU PMI services (Aug) 09.00 53.2
GB PMI services (Aug) 09.30 56.0
Latest data Actual Consensus*
JP Capex (Q2) q/q +7.3% +6.6%
AU ANZ job ads (Aug) m/m +0.5% -0.2% last
* Consensus unless stated
2005, Mellon Financial Corporation Note: Although obtained from sources believed by us to be reliable, Mellon Financial Corporation and its affiliates cannot guarantee the accuracy or completeness of the information upon which this report is based. This report does not purport to disclose the risks or benefits of entering into particular transactions and should not be construed as advice in any specific instance. The views in this report constitute our judgement as of this date and are subject to change without notice.
Ian Gunner 44 20 7163 5996 06.40 EDT Monday May 31 2005
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