Friday January 13, 2006 - 05:00:00 GMT
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Tricom Futures and Foreign Exchange -
Forex: Trichet fails to flex some ECB muscle
The US dollar was trading mixed against the major currency pairs, but is expected to hold support following a weaker US trade deficit and a less hawkish statement from the European Central Bank.
The US dollar was bought overnight, especially against the euro as ECB president Jean-Claude Trichet delivered a less hawkish speech on future rate increases following the central bank's decision to hold rates at 2.25 pct.
This was always going to be a pivotal week for the euro against the US dollar - the expected hawkish ECB statement, together with renewed concerns over the record US external deficit, were supporting a break in the euro above the 1.2150 usd level until both disappointed euro longs.
The US trade deficit for November fell to 64.2 bln usd from the revised record 68.1 bln deficit set in October, and was below market expectations of a reduced deficit of 65.9 bln usd.
As i wrote above, this week was going to be an important week for the EUR against the USD, and was going to go some way towards underlying the market sentiment towards the USD for the first quarter of 2006. However, the USD has shown some resilience, and the ECB has failed to come through with the hawkish comments we were all looking for.
Looking for a subdued end to the week, as the USD bears lick their wounds (me included), and look to fight again next week.
Tonight's key release of US producer price index for December will be closely watched, with the market consensus at a 0.4 pct rise after a 0.7 pct rise in November while the core PPI is expected to rise 0.2 pct from 0.1 pct previously. Retail sales data for December will also be of interest to markets, with a solid 0.8 pct increase forecast for December from 0.3 pct in November.
Today's Economic Release:
US: Retail Sales
US: Business Inventories
Today's Top Trades
- Buy EUR/JPY around 137.80, with a tight stop under 137.50
For more ideas send me an email, [email protected]
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