Wednesday June 30, 2004 - 12:36:25 GMT
Share This Story
Global-View - www.global-view.com
Forex Strategy Session for the Dollar-- NY open
The spotlight today is on the FOMC decision in mid-afternoon New York trade. There is no suspense about the interest rate decision. A 25bp hike in the Fed Funds rate has been priced into the deposit markets for weeks. All the Fed will be doing is affirming the actions of the markets. The only question that may be in play is if the central bank will remove the measured tightening approach from the markets perceptions about policy. One survey of primary dealers says an overwhelming majority see no change in this either. As a result treasuries are little changed this morning heading into New York. Bourses in Japan and Europe are narrowly mixed and gold is up slightly after several days of weakness. Crude is not doing much in electronic trade.
We are still waiting for the final results of the Canadian election. It is assumed that the Liberal Party PM Martin will form a minority government with the help of the New Democratic Party and the Bloc Quebecois. The key question is how stable this marriage of convenience will be.
In Europe, inflation in the Eurozone cooled a touch in the year to June to 2.4% from 2.5% in May. While this outcome is still above the ECB target of just below 2.0%, it is seen easing the pressure on the central bank to make a policy move. Some feel that inflation has probably peaked in the Euroarea for now. On the other hand, business and consumer confidence improved, according to European Commission surveys. Nevertheless, the European economy is lagging the global recovery. In the U.K., final 1Q04 GDP data released today indicated that the economy grew by 3.4%, up from the previous 3.0% estimate and at the strongest pace for 3-1/2 years. Nevertheless, these data are becoming a bit old for the markets to react to. Comments Tuesday by BOE Governor King suggesting that the pace of central bank tightening is not likely to be as rapid as some had been anticipating has been a weight on sterling. Also the CBI Retail Sales survey remained at a strong +43 in June, but was weaker than the +51 in May. Recent data from the U.K. have been suggesting that the economy might be cooling a bit.
In Japan the focus is on the Bank of Japan Quarterly Tankan Survey release on Thursday. The Tankan is expected to see the headline Large Manufacturers Diffusion Index improve to +17 from +12 in the previous quarter. It appears that the markets had set up for this report a bit too far in advance and as a result some yen longs have been squeezed out in recent sessions. Comments reported yesterday by PM Koizumi indicating support for BOJ Governor Fukui statements indicating that the ultra easy policy of the BOJ should continue provide a bid to the bond markets. The yield on the benchmark 10-year maturity fell to 1.78%, -5bp. There is also a report that the government has had to reduce its projected bond issuances by Y1tln because tax revenue was greater than expected. The government is scheduled to report on its borrowings for the last fiscal year Thursday. The conventional wisdom is that there is a large amount of foreign capital waiting o the sidelines for the new quarter and the Tankan survey to move into Japanese equities.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."