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Forex Market UpdateJPY weaker EUR stronger through Asia
FM of Japan Tanigaki said the G7 statement should not have been interpreted as a sign to sell the dollar. Also EUR goes stronger against a basket of currencies in Asia except the dollar.
MAJOR HEADLINES â€“ PREVIOUS SESSION
â€˘ US factory orders orders March, out at 4.2% vs. 3.75 expected.
â€˘ US ISM non-manufacturing April, out at 63.0 vs. 59.4 expected.
â€˘ Fed's Bernanke passed up a chance yesterday to clarify a CNBC report that he said financial markets had misread his recent testimony to the JEC.
â€˘ Japan's Tanigaki is the latest G7 official to say financial markets have misunderstood the recent G7 finmin statement and that currencies have been moving "in a somewhat excessive manner." "The G7 communique did not mean the dollar needs to decline and financial markets are misunderstanding that point," Tanigaki said in Hyderabad where he will attend the ADB annual meeting. Tanigaki repeated MOF"s stance that currencies should reflect economic fundamentals and excessive moves are undesirable.
â€˘ Kiwi dollar weaker in Asia on news of a huge earthquake under the sea off Tonga.
â€˘ Fed's Moskow says US can't run large current account deificts indefinitely - this is similar to comments by Pianalto yesterday. Moskow says large public debt riskss driving up US interest rates. Says rising productivity could keep US growth relatively high.
THEMES TO WATCH â€“ UPCOMING SESSION
Yesterday was a non-event, despite ISM non-manufacturing came out better than expected, but the incentive to buy dollars seems almost non-existent. The break of the 1.2950 area has certainly left both EUR and GBPUSD well bid since Bernanke spoke in front of the JEC.
We expect a quiet opening to the European session as the FX market awaits the ECB interest rate announcement, which is expected to be unchanged at 2.50%, but ECB is expected to signal a June rate hike. More importantly will be the ECB press conference at 12:30 GMT which will give the market direction for the remainder of both the European and NY trading session as the market is looking for Trichet to repeat â€śvigilance is needed on inflationâ€ť, to likely give the EUR further support.
Note: the support/resistance levels used in the matrixâ€™s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur.
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