Thursday September 22, 2005 - 10:55:48 GMT
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Mellon Bank Foreign Exchange - https://fx.mellon.com/
Forex: Mellon FX Daily - U.S. EditionKey Points
• USD remains troubled by Rita uncertainty.
• JPY continues to underperform, but still favoured.
• Canadian CPI, Dodge speech and Swedish GDP feature today.
had a fairly choppy Asian session, including a brief stop-loss driven spike to 1.2270, but steadied in Europe. The full force of Rita hitting the US mainland is unlikely to be felt until late Friday/early Saturday and the uncertainty about what this could mean (especially for US oil-refinery capacity) will likely weigh on the USD today and tomorrow. There is little else in the way of economic data to divert the market’s attention. 1.2330 could be seen on EUR-USD during this period and the positive bias will remain in place as long as 1.2180 holds.
indices were a touch softer than expected, including a downward revision to the previous month’s data. The level of activity has petered out a little in recent months, but remains well above that seen in recent years. The trade surplus was also lower than expected, although in seasonally adjusted terms it was not out of line with the surpluses seen in recent months and exports were still up 2.9% m/m. JPY performance remains disappointing in light of the strength in Japanese equities and the contrasting political fortunes with Europe. The
outlook still looks good and overall downside is still favoured on USD-JPY and EUR-JPY, but oil prices remain a short-term problem and the price action would be a cause for concern if EUR-JPY breaks 136.50 and USD-JPY 112.00. JPY underperformance seems to be most acute during Asian time and there have been reports in recent days about a step up in Japanese investor buying of foreign assets.
The UK CBI
manufacturing survey showed a slight improvement from the weak showing seen in August, but it will do little to change perceptions about current softness in UK activity. The orders balance rose to -27 from the -29 number seen in August, which was the lowest since October 2003. EUR-GBP has been edging up for most of the morning and above 0.6788 would see this moving towards 0.6850.
GDP data for Q2 may influence the SEK if well away from market expectations, although the key issue for the Riksbank is the labour market. The latter does finally seem to be showing some signs of improvement on the basis of the data seen last week, but due to the lack of a reliable seasonally adjusted statistical series it remains difficult to draw firm conclusions.
CPI data is due today and this has not been that helpful for BoC rate hike expectations in recent months. More interesting could be a speech by Dodge, including any observations about the recent move in the CAD to fresh 13-yr highs against the USD.
Latest data Actual Consensus*
SE GDP (Q2) q/q 07.00 +0.6%
CA CPI (Aug) y/y 07.00 +2.7%
CA CPIX (Aug) y/y 07.00 +1.6%
CH SNB’s Hildebrand speaks 07.30
US Initial claims (w/e Sep 17) 08.30 398k last
US Continuing claims (w/e Sep 10) 08.30 2590k last
US Lead indicators (Aug) m/m 10.00 -0.3%
CA BoC’s Dodge speaks 10.00
Latest data Actual Consensus*
JP Tertiary index (Jul) m/m -0.8% -0.7%
JP All-industry index (Jul) m/m -0.8% -0.7%
JP Trade balance (Aug, sa) ¥0.6trn ¥0.8trn
IT Consumer confidence (Sep) 102.8 100.0
EU Manu orders (Jul) m/m -1.6% +1.3%
* 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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