Thursday November 17, 2005 - 06:20:07 GMT
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Tricom Futures and Foreign Exchange -
Forex: Just let the trend be your friend
The US dollar was trading stronger against the euro and yen following solid US economic data overnight, but will need key technical levels to break higher in coming weeks. Solid US Treasury data for September showing record net inflows into US assets initiated US dollar strength overnight, while consumer price index data for October confirmed further rate rises needed in the US.
Gold climbed over 10 usd an ounce Wednesday to close at a one-month high, while silver prices finished above 8 usd an ounce for the first time since December 2004. Strong physical demand, central-bank buying and concerns about inflation drove the broad rally. Russia came out and suggested they would be looking to double their Gold reserves, increasing from 5% to 10%.
More manufacturing data due out in the US tonight, and as long as it doesn't show too much of a slow down, we can expect the USD to continue to trade higher. Elsewhere, the GBP is leading the way lower, particularly in light of the overnight BOE inflation report, which suggested slowing inflation, and thereby signalled no hike in UK rates in the short-medium term.
We really need to see the EUR/USD back above 1.1800 at a minimum before we can consider a change in market sentiment towards the USD.
Today's Economic Release:
UK: Retail Sales
US: Industrial Production
US: Capacity Utilisation
US: Philly Fed
Today's Top Trades
- Sell EUR/USD around 1.1690-1.1710
- Buy USD/CHF around 1.3210-20
For more ideas send me an email, [email protected]
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