Wednesday July 21, 2004 - 09:56:14 GMT
Share This Story
INVESTICA Ltd - www.investica.co.uk
Greenspan boosts dollar
Greenspan's comments have helped create a more balanced view on the US currency. Overall sentiment is, however, still bearish and the bulk of the move has been due to a reduction in long Euro positions rather than strong dollar interest. Nevertheless, it reinforces the fact that long Euro positions offer little immediate value above the 1.2480 level and it will be even tougher to break 1.25 over the next 2 weeks. The Euro will need to hold support around 1.23 to avoid a more dramatic reversal of sentiment.
The Euro was subjected to some profit taking ahead of Fed Chairman Greenspan's testimony on Tuesday and this trend was reinforced afterwards. The Euro dipped to a low of 1.23 before edging back to 1.2340 in early Europe on Wednesday.
Although Greenspan's comments overall were close to expectations, the balance was slightly more positive than expected. Primarily, this reflected his confidence that the economy would regain momentum after the slowdown seen in June. He expressed confidence that car sales were rebounding and that the expansion was broadly based. Greenspan maintained optimism that monetary policy would be tightened in a measured way, but he was careful to leave all options open.
Markets have become generally pessimistic over the US economy over the past 2-3 weeks and Greenspan's comments have encouraged a slight shift. This will tend to discourage aggressive dollar selling. Housing starts, however, fell sharply by 8.5% in June which could be a longer-term concern and the dollar will still find it difficult to secure strong buying interest. The importance of July data due for release in early August has increased.
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."