Monday May 21, 2007 - 10:34:13 GMT
Share This Story
Mellon Bank Foreign Exchange - https://fx.mellon.com/
Forex Research - Mellon FX Daily - U.S. Edition
Mellon FX Daily 06:00 EDT
â€¢ USD holds in well overnight, retaining upside liquidation risk.
â€¢ EUR-USD downside would open up below 1.3440-60.
â€¢ IMM net EUR-USD longs at new record high.
â€¢ Quiet data schedule ahead of next weekâ€™s manufacturing ISM and employment report
â€¢ CAD momentum still intact after Fridayâ€™s break â€“ support on USD-CAD at 1.0750-75.
The decision by Kuwait
over the weekend to drop the USD peg in favour of a basket of currencies weighed on the USD at the Asian open, but it has since bounced back, with other countries in the region stating that they did not plan to follow suit (although the UAE has yet to comment). The Kuwaiti decision owes much to the rising inflation backdrop due to recent USD weakness.
There is a quiet week in prospect for news releases with durable orders, new home sales and existing home sales featuring in the US and a number of business surveys such as IFO and ZEW due in the Eurozone. It seems unlikely that any of these releases will significantly change market sentiment about respective outlooks for ECB and Fed policies. Last monthâ€™s stronger ISM surveys have been at the foundation of the recent hardening in US rate expectations and essentially the market has been waiting ever since to see whether such improvements are genuine and have been sustained. There has been some element of support to the stronger picture painted by the ISMs, e.g. in the slightly firmer Fed surveys seen last week, but the market will most likely prefer to wait and see.
for manufacturing is not due until Friday next week (June 1), while the ISM for non-manufacturing is due on Monday June 4. The employment report is also out on June 1 and has itself become more interesting after the recent improvements seen in the weekly jobless claims numbers. The â€˜continuing claimsâ€™ number due on Thursday will be for the same week as the survey week for payrolls and any strength or weakness could affect sentiment on the actual employment report. The market is likely to remain hesitant about taking a fresh view about the US until next weekâ€™s data, but such hesitancy could yet turn into further liquidation of short USD positioning and there is a good chance of this happening over the coming week or so. Latest IMM
data showed net spec EURUSD longs advancing to a new record high of 119,568 contracts as of last Tuesday, up from 105,270 the previous week. 1.3340 could be seen during this period, with a break of 1.3440-60 likely to be the trigger for such selling. The levels mentioned on Friday about the USD index are also still relevant. 82.40 (which held again on Friday) and 82.60 need to break to suggest a further significant improvement in short-term USD prospects.
M4 data came out on the strong side of expectations, although money and mortgage lending were steady and market impact was limited. The market is waiting for Wednesdayâ€™s MPC minutes. EUR-GBP looks well contained between 0.6820-70, while cable has downside risk to 1.9550-1.9600.
Following Fridayâ€™s break to a fresh 29-yr low, USD-CAD
momentum looks like taking it lower still in the short-term. Further weakness has been seen this morning (helped by ongoing strength in oil prices), although 1.0750-75 should hold for now and some consolidation could then be seen over coming weeks between 1.0750-1.1000. The tone of next Tuesdayâ€™s BoC rate announcement will influence how the situation progresses from there. There are no further Canadian economic releases due before the BoC decision.
Data/event EDT Consensus*
CA Market holiday
Latest data Actual Consensus*
GB Rightmove house prices (May) y/y +13.1% +15% last
GB M4 (Apr) y/y +13.3% +12.4%
GB M4 lending (Apr) y/y +12.9% +13.5% last
GB BBA mortgage lending (Apr) +Â£5.0bn +Â£5.1bn last
GB PSNCR (Apr) -Â£3.8bn -Â£1.5bn
* Consensus unless stated
Ian Gunner 44 20 7163 5996
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
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."