Wednesday January 25, 2006 - 07:01:35 GMT
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Tricom Futures and Foreign Exchange -
Forex: A big day in Europe, which could set the scene for the next move
The dollar was off lows but remained depressed against a host of currencies, with the end of the US rate hiking cycle perceived to be drawing near. The US currency fell sharply Monday and was not been able to claw back much lost ground in a quieter session marked by a dearth of economic data.
The dollar's falls may be attributed to a case of the market realising that the end of the Fed's rate hiking cycle is within sight. The Fed makes its first rate decision of the year a week from today and while another quarter point hike to 4.50 pct is widely expected, the smart money will be on the wording of the accompanying statement.
There are other fundamental reasons for selling the dollar too, such as, the renewed focus on the unsustainable current account and budget deficits faced by the US.
If the the Fed signals that the hike may be the last in the cycle the dollar could be heading for a period of weakness
Alot of data out early today from Europe, with German CPI, and UK GDP, and BOE minutes taking centre stage.
The market seems to have stalled after Monday's move, but i think we have to try and go with it. Just be a little more conservative with your entry levels, as this move could result in the USD rebounding to retrace alot of Monday's slide.
Today's Economic Release:
UK: BOE Minutes
US: Existing Home Sales
US: Weekly Jobless
US: Wholesale Trade
Today's Top Trades
- Buy EUR/USD around 1.2220, with stops under 1.2170
- Sell USD/CHF around 1.2670, with stops above 1.2720
For more ideas send me an email, [email protected]
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