Monday April 30, 2007 - 10:46:14 GMT
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Mellon Bank Foreign Exchange - https://fx.mellon.com/
Forex Research - Mellon FX Daily - U.S. Edition
Mellon FX Daily 06:00 EDT
â€¢ Consolidative mood remains in place - the tone of key US data releases this week will be critical for
short-term USD direction.
â€¢ JPY likely to remain subdued.
â€¢ Eurozone money data stronger than expected, reinforcing heightened ECB policy expectations.
â€¢ US core PCE prices and Chicago PMI feature today.
A fairly quiet Asian session with Japan away on holiday, although the corrective tone of Friday has not yet lifted and there would be a risk of this developing further if 1.3585 breaks on EUR-USD.
Latest IMM positioning data (net spec EUR-USD longs up to a new record of 111,282 contracts from 106,770) is evidence of the corrective risk in place.
However, of ultimate importance this week will be whether the tone of key US releases like the ISM surveys and the employment report offer support to such positioning. Any fresh weakness in the US data will be USD negative, especially with rate expectations remaining firm in the Eurozone. Any surprising strength would spark corrective pressure.
Stronger than expected money data out of the Eurozone this morning failed to boost the EUR. Headline M3 data advanced further, while the y/y rate on private sector lending also strengthened, a feat in itself given how strong the m/m rise in lending was at the same time last year. This data will reinforce the arguments from the more hawkish element of the ECB.
is off the lows seen last week (helped in small part by China hiking reserve requirements) although a major recovery will be difficult in the short-term. If a USD corrective mood does develop this will most probably weigh on EUR-JPY and GBPJPY, but in such circumstances USD-JPY would probably advance beyond 120.
â€“ core PCE prices are out today and on the basis of what was seen in Fridayâ€™s quarterly GDP data a soft number looks likely. Chicago PMI is also out and will have an impact on expectations about the full ISM tomorrow. However, Chicago PMI has been volatile and out of sync with the ISM over the past two months.
Data/event EDT Consensus*
ZA Trade balance (Mar) 08.00 -Z4.2bn
US Personal income (Mar) m/m 08.30 +0.6%
US PCE (Mar) m/m 08.30 +0.5%
US Core PCE price index (Mar) m/m 08.30 +0.1%
US Core PCE price index (Mar) y/y 08.30 +2.2%
CA GDP (Feb) m/m 08.30 +0.2%
US Chicago PMI (Apr) 09.45 54.0
Latest data Actual Consensus*
AU Private sector credit (Mar) m/m +1.2% +1.1%
DE Retail sales (Mar) m/m -0.7% +0.8%
EU M3 (Mar) y/y +10.9% +9.7%
EU M3 (Mar) 3m y/y +10.3% +9.8%
EU Private sector lending (Mar) y/y +10.5% +10.3% last
GB BBA mort approvals (Mar, nsa) y/y -12% -5% last
EU CPI (Apr, flash est) y/y +1.8% +1.8%
EU Econ sentiment (Apr) 111.0 111.7
EU Business climate index (Apr) 1.61 1.60
IT CPI (Apr, prel) y/y +1.5% +1.6%
GB Consumer confidence (Apr) -6 -8
* 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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