Thursday January 12, 2006 - 05:55:19 GMT
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Tricom Futures and Foreign Exchange -
Forex: Interest rates are back under the spotlight
The US dollar was trading mixed against the euro and yen, but selling risks are evident ahead of the US trade deficit and an expected hawkish statement following the European Central Bank meeting tonight.
The US dollar was sold overnight as traders turned to interest rate expectations in the coming months, with some influence from geopolitical concerns arising from Iran's decision to resume nuclear fuel research
Most of the market is playing a waiting game today ahead of today's ECB and BOE meetings, and later the US Trade data.
Today, currency traders are anticipating ECB head Jean-Claude Trichet will be more aggressive in signalling further interest rate increases this year, now that the euro zone economy is showing signs of life
Although no rate hike is expected following tonight's ECB meeting, the following statement by Trichet is expected to outline these aggressive signals providing support for the euro.
The market consensus for the US trade deficit for November is centred on a 66.1 bln usd outcome which is below the record deficit of 68.9 bln usd set in October, while market expectations range between 62-71 bln usd
Today's Economic Release:
UK: BOE Meeting
EU: ECB meeting
Today's Top Trades
- EUR/USD: Buy dips to 1.2110, with stops under 1.2060
- USD/JPY: Sell strength towards 114.40-50, with stops above 115.00
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