Wednesday June 30, 2004 - 23:05:07 GMT
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GVI FOREX DOLLAR SENTIMENT SURVEY
The second GVI biweekly forex survey of professional traders resulted in another set of interesting responses. Our sample size increased to 87 from 78 in mid-June and it appears that a more unified outlook on the market emerged.
The short-term outlook for the market was remarkably narrow in terms of the forecasts of traders for where the dollar will close in Europe on July 9. The base values at the time of the survey were: eur/$ 1.2080 and $/yen 108.30. Mean forecasted levels were 1.2093 (standard deviation 5.31) and 108.24 (7.18). Thus while each of the two dollar values are seen unchanged, there is a wide range of views. If these forecast are representative of the markets, to some this might suggest that the market is not heavily unbalanced (overbought or oversold) in either direction.
In our special topic we asked what the main forex theme would be in the second half of this year: twin deficits (budget and trade), monetary policy/interest rates, or politics/terrorism. Monetary policy outpolled the deficits by about two and one half to one. This is a curious result because the dollar is seen lower by yearend and most attribute its weakness to the twin deficits.
In our tracking polls, those expecting Bush to beat Kerry in November increased insignificantly from two weeks ago to 72%-28% from 71%-29%. As for yearend dollar values, the eur/$ is seen at 1.2152 (10.28) from 1.2030 (13.08) a week ago. The $/yen is seen at 106.11 (10.28) from 108.18 (10.04). Note that the standard deviation on the higher eur/$ forecast narrowed indicating that this view is becoming more widespread.
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