Thursday October 13, 2005 - 05:51:35 GMT
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Tricom Futures and Foreign Exchange -
Forex: Euro Note: When things look their worst, that's when they turn
The US dollar continued its recent uptrend, hitting a 17-month high of 114.84 against the yen in midday trade as investors continued to anticipate a further spike in US interest rates. The US Federal Reserve is widely expected to continue with its cycle of rate hikes after minutes from its last policy meeting showed rising concern over inflation. The continued uptrend in US interest rates is widening the rate differentials with Japan and making US assets more attractive.
While the dollar's uptrend remains firmly intact, the unit was showing signs of turning top heavy as investors turned cautious ahead of upcoming US trade (today) and consumer price index (CPI) data (tomorrow).
Meanwhile, the Euro's failure to break and maintain trade above 1.2050 suggests continued negative sentiment towards the single currency.
This market is proving hard to trade for small accounts, as the placement of stops becomes difficult to judge. The larger traders are not moving the market in any distinct trend - we're seeing a couple of days of USD strength, followed by a couple of days of profit-taking.
I maintain that once the political situation in Germany cools off, and once we start to see signs of slowing economic activity in the US, the USD will come off, and it won't be slow. For this reason i continue to like accumulating longs in the EUR under 1.2000, and GBp under 1.7500. Conversely, look to sell USD/CHF around 1.2950-1.3000, and USD/JPY above 114.75.
Today’s Economic Releases:
US: Trade Balance
US: Treasury Deficit
Today's Top Trades
. Sell USD/JPY around 114.75, with a 50 pip stop
. Sell EUR/USD around 1.2015-20, with stops above 1.2050 - for a day trade only
For more ideas send me an email, [email protected]
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