Friday March 24, 2006 - 08:19:36 GMT
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Tricom Futures and Foreign Exchange -
Forex: This looks like a case of Buy the USD pre-FOMC, and Sell it post FOMC
The US dollar was drifting in narrow range trading here with investors refraining from taking fresh positions ahead of the release later today of US new home sales data for February.
The data is expected to provide fresh evidence on the pace of the home sales market in the US which has been a key driver of the economy. Overnight data showed that existing homes sales in the US in Feb rose 5.2 pct to a 6.91 mln, the biggest rise in two years, and ahead of the market consensus of 6.5 mln.
Stronger than expected new home sales tonight would likely be viewed by the market as further evidence that the Federal Reserve will likely continue with further rate increases beyond a 25 basis points hike expected at its next policy meeting next week.
Nice move higher in the USD overnight, and subsquent sell-off in EUR and GBP. Looking for the USD to remain bid going into Tuesday's FOMC meeting, particularly given the EUR/USD's failure to hold 1.1980-1.2000.
We might see some profit taking in USD longs early today ahead of the US data later, and the weekend, but we should use this as an opportunity to get long USD, or sell into EUR and GBP strength.
Today's Economic Release:
US: Durable Goods
US: New Home Sales
Today's Top Trades
- Sell EUR/USD around 1.1975-80, with stops above 1.2025
For more ideas send me an email, [email protected]
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