Monday September 25, 2006 - 10:29:24 GMT
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Mellon Bank Foreign Exchange - https://fx.mellon.com/
Forex: Mellon FX Daily - U.S. EditionKey Points
â€¢ EUR-USD testing towards key support at 1.2740-50.
â€¢ JPY liquidation risk remains in place.
â€¢ GBP boosted by Gieve comments.
â€¢ US existing home sales feature today.
Few fresh factors for EUR-USD,
which was soft early on in Europe and fell even further following a weak German state CPI number. It now looks set to test towards 1.2740-50 (previously resistance but now support) but this should hold ahead of todayâ€™s US existing home sales data. The status of that data will be significant (see below for preview). Overall, the upside bias on EUR-USD will remain as long as it stays above the pivotal 1.2740-50 area.
Few fresh factors on the JPY,
although on the basis of the latest IMM positioning data, liquidation risk remains in place, especially on EUR-JPY. A test of the 147.60-148.20 area looks likely in the very short-term, although for now USD-JPY is holding in around 116.00-20.
was boosted by some hawkish comments from MPC member Gieve, which add weight to the likelihood of a further UK rate hike in November. This and other comments from MPC members (notably Barker) suggest that the MPC is likely to raise rates in November and the market may even start to focus on the possibility of a move in October, although this will require a further strengthening in key data releases. For the time being EUR-GBP remains supported by the key 0.6700-20 area, although this is looking increasingly vulnerable and a break would leave room towards 0.6600.
the Fedâ€™s Fisher speaks today and it will be interesting to see whether any mention is made of recent economic developments, especially the weakness in oil prices. While the latter is a source of comfort in terms of headline CPI measures it should actually be a strong supporting factor for economic activity, so the implications for interest rates are not obvious. Existing home sales numbers are due and the market will be sensitive to any gross weakness or a rebound after the weakness seen in recent months. However, any rebound would be merely related to the typical m/m volatility in this series, with the overall downtrend looking well established.
Data/event EDT Consensus*
DE CPI (Sep, prel) m/m n/a -0.3%
US Fedâ€™s Fisher spks 09.15
US Existing home sales (Aug) 10.00 6.20m
US Fedâ€™s Geithner speaks 17.30
NZ Trade balance (Aug) 18.45 -NZ$732m
JP CSPI (Aug) y/y 19.50 0.0%
Latest data Actual Consensus*
FR Own company ind outlook (Sep) +10 +10
FR Business climate indicator (Sep) 107 108
SE Trade balance (Aug) SEK9.5bn SEK8.5bn
DE Hesse CPI (Sep) m/m -0.4%
* 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.
Ian Gunner 44 20 7163 5996 06.40 EDT Monday May 31 2005
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