Tuesday February 6, 2007 - 11:34:26 GMT
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Mellon Bank Foreign Exchange - https://fx.mellon.com/
Forex: Mellon FX Daily - U.S. Edition
Mellon FX Daily 06:10 EST
â€˘ Not much on todayâ€™s schedule to divert attention away from the JPY.
â€˘ Short JPY liquidation risk remains high for now.
â€˘ EUR-USD would be depressed by further EUR-JPY weakness, but range likely to remain intact.
â€˘ AUD steady ahead of RBA announcement.
It looks like being more of the same today in terms of upside risk for the JPY
, with little on the agenda to divert market attention away from key meetings regarding G7 and the ECB. The introduction of some doubt about future ECB policy has added a crucial extra dimension to JPY risks, as hefty EUR-JPY positioning is now being threatened from both angles, at least from a short-term perspective. This means more liquidation risk on EUR-JPY in the next day or so, even though the G7 meeting itself is unlikely to see any developments that will directly challenge the weak JPY background or the reasons behind it. The ECB outcome is more contentious and key will be what is signalled for March. Trichet is likely to directly challenge the whole concept of the ECB signalling covertly via select newswires.
weakens further in the next couple of days (risk to 154.50-155.00 ahead of key support at 153.65) this would put additional pressure on EUR-USD, although the bottom of the current range at 1.2860 should hold. USD-JPY traded as low as 120.03 overnight before stabilising and support is at 119.75-120.00. Risk of a retest of this area today.
has been knocked around a little by the data over the past 24 hours. The sub-60 PMI services number represented the modification of one factor that could have heightened rate hike fears for Thursday, supporting tighter policy, although a strong BRC sales survey released last night (+3.1% y/y for Jan) supplemented the strong consumer reading represented in the CBI survey. GBP is likely to remain underpinned against the EUR ahead of Thursdayâ€™s meeting.
is steady ahead of tonightâ€™s RBA outcome, although the slightly weaker than expected retail sales data earlier in the week pretty much put an end to any lingering hopes of a rate rise. If they leave rates unchanged there will be no statement and the decision may yet exert some initial downward pressure on the AUD, although this should be limited. Support is at 0.7700, while above 0.7770 is needed to suggest fresh uplift.
â€“ there are various Fed speakers today although it seems unlikely that any will advance any fresh comment on future policy direction.
Data/event EDT Consensus*
NZ Market Holiday
US Chain store sls (w/e Feb 3) w/w 07.45 -0.9%
CA Building permits (Dec) m/m 08.30 -2.5%
US Redbook sls (w/e Feb 3) m/m 08.55 +1.6% last
US Fedâ€™s Moskow on Chicago economy 13.00
US Fedâ€™s Bernanke spks on income distribution 13.30
US Fedâ€™s Yellen on Asia crisis ten years on 15.30
US ABC consumer conf (w/e Feb 4) 17.00 -3 last
AU RBA rate announcement 17.30 unch
Latest data Actual Consensus*
GB BRC retail survey (Jan) y/y +3.1% +2.5% last
EU Retail sales (Dec) m/m +0.3% +1.1%
DE Manu orders (Dec) m/m -0.2% +0.5%
* Consensus unless stated
ď›™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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