Monday January 16, 2006 - 12:21:57 GMT
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Mellon Bank Foreign Exchange - https://fx.mellon.com/
Forex: Mellon FX Daily - U.S. EditionKey Points
• US holiday will significantly thin out market activity today.
• EUR could give up some of Friday’s gains ahead of US data releases this week.
• UK PPI features today – RICS house price balance tonight.
has managed to hold on to the firm tone seen in the US afternoon on Friday after Trichet reminded the market that the ECB was still intent on being vigilant about potential inflation pressure. This was a clear response to the fuss made on Thursday when he failed to use the word vigilant at the post meeting press conference. Trichet’s low-key approach to policy on Thursday was almost certainly due to a desire on his part not to stoke rate hike speculation further, but his true intentions may have been brought into the open by Friday’s comment.
still has a number of levels of importance to face up to – notably the 200-day moving average at 1.2196. A US holiday today will significantly thin out market activity and there are a number of items on the US agenda this week - NY/Philly Fed indices, industrial output, NAHB housing market index, housing starts, CPI, Michigan sentiment and the Beige Book – with potential to affect Fed policy expectations and market apprehension about this issue will most probably limit any major movement today. If anything there is a risk that EUR-USD gives up some of the gains seen since Friday – below 1.2125-35 would open up some downside risk. The 1.20-1.22 range looks like remaining intact unless something significant can develop datawise this week.
PPI data is due today and this has been showing a much softer tone in recent months. The fall in the core PPI output y/y rate has been one of several factors leading to speculation that the MPC will be more relaxed about potential inflation pressure going forward. It seems unlikely that this view will be altered by today’s data. Tonight also sees the latest RICS house price balance and another decent improvement seems likely as respondents switch to reporting higher rather than lower prices.
Data/event EDT Consensus*
NO Trade balance (Dec) 09.00 NOK25.9bn
GB PPI input (Dec) m/m 09.30 +0.6%
GB PPI output (Dec) m/m 09.30 +0.1%
GB PPI output core (Dec) y/y 09.30 +1.5%
GB ODPM house prices (Nov) y/y 09.30 +2.6%
GB RICS house prices (Dec) 00.01 +8%
AU Housing finance (Nov) m/m 00.30 0.0%
Latest data Actual Consensus*
JP Domestic CGPI (Dec) y/y +2.2% +2.1%
JP Current account (Nov, sa) Y1.6trn Y1.76trn
JP Ind prod (Nov, final) m/m +1.5% +1.4%
* Consensus unless stated
2005, Mellon Financial Corporation Note: Although obtained from sources believed by us to be reliable, Mellon Financial Corporation and its affiliates cannot guarantee the accuracy or completeness of the information upon which this report is based. This report does not purport to disclose the risks or benefits of entering into particular transactions and should not be construed as advice in any specific instance. The views in this report constitute our judgement as of this date and are subject to change without notice.
Ian Gunner 44 20 7163 5996 06.40 EDT Monday May 31 2005
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