Monday August 21, 2006 - 10:53:54 GMT
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Mellon Bank Foreign Exchange - https://fx.mellon.com/
Forex: Mellon FX Daily - U.S. EditionKey Points
â€¢ EUR-USD pushing higher but yet to break above recent range highs.
â€¢ JPY gives up Fridayâ€™s gains as market focuses on domestic policy and the risk of a soft CPI report this week.
â€¢ Canadian retail sales features today.
has been pressing higher in both Asian and European trading, but has yet to move beyond the borders of recent ranges, with 1.2890-1.2915 the initial resistance area ahead of 1.2950-1.3000. Key today will be how the North American market greets these higher levels and whether 1.2915 can be breached. Medium-term risk remains to the upside given the likelihood of more ECB rate rises, but this is unlikely to proceed in the short-term. 1.2865 is the immediate support today and any break below there would suggest some minor weakness. The status of the German IFO number (due Thursday) is probably this weekâ€™s most important event.
has managed to creep a little higher, touching a fresh record high at 149.15. The JPY has generally been a little softer, with no follow through support from Fridayâ€™s Chinese rate hike. This is not too surprising as the Chinese move was not entirely unexpected and in the absence of some generalized Asian currency strength the JPY will remain handicapped by expectations of very low interest rates.
Indeed, the market will be eyeing Fridayâ€™s CPI release in Japan and the risk of some downward revisions to y/y rates following the reweighting/rebasing of the key indices. This may weigh on nthe JPY during the week, although 150 should hold on EURJPY.
after last monthâ€™s m/m drop, retail sales should have steadied in June, but any recovery may be limited. There is some risk that consumers may have held back on purchases ahead of the cut in the federal sales tax on July 1, which would suggest another soft report and a rebound next month. Clearly, such a backdrop makes it difficult to interpret underlying trends and up until very recently they have been fairly robust (see chart).
the all industry activity index is due tonight and if last weekâ€™s soft tertiary number is any guide a similarly subdued outcome looks likely. However, market focus this week is primarily on Fridayâ€™s CPI report, which will include a rebasing and reweighting of the consumer price indices.
Data/event EDT Consensus*
CA Retail sales (Jun) m/m 08.30 +0.3%
CA Retail sales ex-autos (Jun) m/m 08.30 +0.3%
AU RBAâ€™s Battellino speaks 19.10
JP All-industry index (Jun) m/m 19.50 +0.1%
Latest data Actual Consensus*
GB Rightmove house prices (Aug) y/y +9.0% +10.6% last
EU Trade balance (Jun, sa) -â‚¬1.1bn -â‚¬1.2bn
* Consensus unless stated
ï›™2005, Mellon Financial Corporation Note: Although obtained from sources believed by us to be reliable, Mellon Financial Corporation and its affiliates cannot guarantee the accuracy or completeness of the information upon which this report is based. This report does not purport to disclose the risks or benefits of entering into particular transactions and should not be construed as advice in any specific instance. The views in this report constitute our judgement as of this date and are subject to change without notice.
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