Wednesday July 7, 2004 - 09:39:13 GMT
Share This Story
INVESTICA Ltd - www.investica.co.uk
Dollar remains vulnerable
The dollar will continue to be unsettled by the disappointing data over the past few days. The downgrading of interest rate expectations will hurt the dollar directly and will also encourage renewed capital flows into high-yield currencies. There is also the risk of market concerns over Wall Street trends and high oil prices. The Euro is testing resistance at 1.2350/60 and, although resistance here could still be tough, a medium-term target of 1.25 looks realistic.
The dollar was unable to strengthen through 1.2270 against the Euro and the US currency was pushed back on the defensive in early Europe on Wednesday. The Euro attacked the 1.2350 resistance level and the dollar was finding it difficult to hold support at this level.
The US economic data offered little support with the ISM index for the services sector declining to 59.9 in June from 65.2 in May. The employment and orders components were firm, but expectations over an aggressive US Fed tightening will still fade and this will tend to undermine the US currency. The shift in US rate expectations is likely to increase the attraction of high-yield currencies.
If short-term US rates do not rise rapidly, there will also be a greater pressure on portfolio inflows to support the US currency and this will increase the importance of Wall Street. Recent trends have been disappointing with the Dow Jones index falling to a four-week low, while technology stocks fell sharply on Tuesday, and this will reinforce near-term negative dollar sentiment.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."