Tuesday August 1, 2006 - 07:06:04 GMT
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CMC Markets - www.cmcmarkets.com
Month gets off to quiet start; data may offer further direction in due course.
August 1st - Thereâ€™s been little fundamental data around to direct currency markets overnight so itâ€™s predominantly been posturing and perhaps a degree of short covering of exposed dollar positions ahead of the new monthâ€™s data that has been providing the most momentum. The debate as to whether the Fed will finally mark an end to the ongoing run of rate hikes next week remains open but consensus is building that a dovish policy will at last prevail. However the non-farm payrolls on Friday could easily see this opinion swing back, especially if thereâ€™s some upbeat growth recorded here. From a geopolitical perspective, many traders are keeping a close watch on the situation in the Middle East â€“ earlier last month the dollar had been sporting a definite war premium and although this has dissipated of late, thereâ€™s still no assurance that the current cease-fire will necessarily offer a longer term resolution. Any resumption in the fighting may as such give some renewed support for the greenback going forward. Elsewhere, disappointing auto-sales data out of Japan may have left the Yen under a little pressure in the short term although this has since proved to be short lived as attention instead concentrates on the prospect of converging cash yields across the Pacific, so overall itâ€™s shaping up to be a rather quiet start to August.
Stuart Scrase and Enis Mehmet
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