Wednesday September 14, 2005 - 05:30:28 GMT
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Tricom Futures and Foreign Exchange -
Forex: The USD has more upside, BUT not much more
The US dollar lost ground against major currencies as profit taking took hold after the greenback had surged overnight with investors encouraged by some upbeat US trade data. The USD/JPY had moved above 111 and below 1.2250 USD to the euro in New York overnight after the final trade deficit for July came in at a level that surprised the market. The deficit narrowed on the month by 2.6 pct to 57.9 bln usd, compared with the initial estimate of 58.8 bln. The consensus forecast of Wall Street economists had been for the deficit to widen to 59.5 bln usd. US exports in the month rose while imports fell overall despite record prices for imported oil.
It now appears almost certain that the Fed will raise rates next week by 25bps, and the market has almost priced in such news, meaning the upside in the USD is approaching its limitations, possibly around 1.2680-1.2700. Conversely, the EUR/USD maybe appraoching Buy territory around 1.2210-00. I'm reluctant to look for selling opportunties in the EUR, or buying levels in the USD today, as i think the market is ready to turn shortly.
The latest trade data was seen adding strength to the argument that the Federal Reserve was likely to push ahead with its cycle of rate increases at its policy meeting on September 20. Earlier the forex market had been concerned that damage to the economy from Hurricane Katrina might cause the Fed to sit pat on rates in September.
Today’s Economic Releases:
US: Retail Sales
US: Industrial Production
Today’s Top Trades
· Buy EUR/USD around 1.2215, with a 50 point stop
. Sell USD/CHF around 1.2670-80, with a 50 point stop
For more ideas send me an email, [email protected]
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