THE WEEK FOR OUR DOLLAR. "POOR" THING!!!
FIGURES DON'T LIE, -BUT, LIARS FIGURE! COPY right--- GR.On Wednesday, the USD benefited from the US trade data. The balance showed a smaller than expected deficit. Probably some type of number fixing going on here in my opinion!!! This came out at 65.7 bln. $ compared to the consensus 67.5 bln. $. This helped the USD to immediate gains. The EUR/USD pair sank from the 1.2140 area to the 1.2080 zone in a spikish movement. There, things ground to a standstill though and already a counter movement developed. Looking at the details of the trade balance the oil component is important and as prices again rose since February, the risk is of a re-widening in the deficit going forward.
The EUR/USD pair went slightly higher and settled at the 1.21 zone. Also, now the attention will go to next week’s TIC data to see the net capital inflows into the US. The USD is looking ahead now to today’s data and is still being encouraged by what it expects to get. These are solid enough US retail sales, expected to show a 0.4% rise M/M. We stick to the recent word of caution on the euro. Even as the longer-term view is kept intact for a buy-euro-on-dip scenario, one cannot be blind to the fact that the euro momentum has been taken away near term by the ECB’s postponement for rate hike to June (instead of market expectations for May). This is temporary in our view though and the market should be trying to find a bottom in EUR/USD before re-launching a move to the year highs.
Other data today of interest include the Michigan consumer confidence release for April. Also some Fed speakers take to the stage. Watch out for slowing trading as most markets are closed on Friday for Easter on Friday.
The Dollar was in trouble ( and I'm sure will soon be again only much worse ), as the EUR/USD pair moved above the recent highs at the 1.22 zone. A test at the 1.2323-year highs failed and this now makes the picture less euro bullish at this stage, re-entering the sideways era. Support stands at 1.2068/.64 (38% retracement / yesterday low), at 1.2057 (LT MA), at 1.2040 (daily envelope), at 1.2019 (62% retracement), at 1.1977/.49 (previous lows) and at 1.1922 (uptrendline since low ’05). Resistance comes in 1.2143 (daily envelope), at 1.2168/.70 (yesterday high / breakdown hourly), at 1.2195 (breakdown daily) and at 1.2224 (previous MT reaction high).
Sterling felt well supported early on as reports showed that the NASDAQ had taken a 15% share in the London Stock Exchange (LSE). This revived market speculation of a renewed takeover bid by the NASDAQ.
Recall that they dropped their offer some 10 days ago. M&A news is one of the key drivers of sterling strength these past months. This should of course be mostly visible in GBP/USD as it involves a US versus a UK company and the prior offer of NASDAQ was cash… But the upmove in GBP/USD was countered of course by the USD strength after the US trade balance data, while this wasn’t the case in EUR/GBP, where much to the contrary the downmove in EUR/USD may even have panned out to drive EUR/GBP lower a swell It was a double whammy EUR/GBP as it were, which resulted in a sharp decline in the rate from the 0.6950 zone to the 0.6900 area.
The UK Labour market report showed a mixed picture, with unemployed growing by 12.6 K, but average earnings including bonuses rising by 4.2% (from 3.6%). Overall, we did not see it as major item on the market. Everything has worked well together to drive EUR/GBP lower yesterday, but it feels a bit exaggerated nevertheless. Therefore, we keep the longer term bias in place for euro optimism, but prefer to wait for some bottoming out before rejoining the ranks of euro longs.
Today, the UK BCC business survey is awaited (12.00 CET). The BoE looks at this survey’s components for guidance, so it could be of some market interest as well. The EUR/GBP pair has long been caught between the 0.67 and 0.70 areas, but last week has been really stress testing the upward boundary, but the break wasn’t confirmed and the pair is now back in the established trading range. Support stands at 0.6905 (low yesterday), at 0.6899/.90 (38% retracement / daily envelope) and at 0.6869/.66 (low 27 mar / daily Bollinger bottom). Resistance stands at 0.6931/.33 (broken daily uptrendline / daily envelope), at 0.6952 (yesterday high) and at 0.6971 (week high). USD/JPY moved slightly higher yesterday; the pro dollar mood was instigated by the smaller than expected US trade deficit. The pair made some minor gains towards the mid 118 area on the day.
This morning, the weekly portfolio data showed continued net inflow into Japan at the start of the new fiscal year. This came as foreign investors poured more money in Japan than Japanese sent off abroad though. This may show though that Japanese are staying more at home with their money, investing in Japanese bonds as yields have risen at home. Also, Japanese tend to stay home in times of upped geopolitical stress, regarding the yen as a safe haven. The data had no impact on USD/JPY. China talk continues to make headlines.
The White House keeps hammering away at demanding action from China to dampen the US trade deficit with the country. The US trade deficit narrowed in February, but in our view this is a yearly phenomenon linked to the Chinese New year. China is not showing much signs in letting the yuan become more flexible. Indeed, this morning the PBOC even set the mid point yuan rate surprisingly low at 8.0248 versus the dollar; This is sharply lower than the prior day, with 1.2% namely and it’s the largest drop on a single day since the revaluation. Knifes are being sharpened in the run-up to President’s Hu Jintao’s visit to Washington, that is clear. Today, the US retail sales will determine USD sentiment to a great extent and guide the intraday movement of the USD/JPY pair. A good release should see an attempt to move above 119, but I must say I regard this as very difficult to maintain. The fundamental bias is kept for the standing USD/JPY sideways picture between the 115 and 119 areas, as we see little movement near term in the relative rate differentials in the two zones. The pressure over the past days was oriented to the upside, but we feel some hesitance to go for a true test, also ahead of a longer weekend. Technically speaking, the USD/JPY pair is moving in a broad sideways range between the 119.40 and 115 areas. The pair is in the overbought area. Support stands at 118.18 (daily envlope), at 117.89 (MT MA), at 117.55/.41 (daily Bollinger midline / LTT MA) and at 117.21 (daily uptrendline). Resistance comes in at 118.61 (yesterday high), at 118.89/.92 (week high / daily Bollinger top), at 119.00 (daily envelope) and at 119.19/.39 (March high / year high).
THURSDAY, 13 APRIL 2006 CONSENSUS PREVIOUS US 14.30 Initial jobless claims (Apr 8) W/W 305K 299K 14.30 Continuing claims (Apr 1) W/W 2450K 2440K 14.30 Import price index (Mar) M/M Y/Y 0.2% -0.5% / 7.4% 14.30 Retail sales (Mar) M/M 0.4% -1.4% 14.30 Retail sales less cars (Mar) M/M 0.5% -0.6% 14.30 Business inventories (Feb) M/M 0.3% 0.4% 15.45 Michigan consumer confidence (Apr P) 89.0 88.9 Canada 14.30 Manufacturing shipments (Feb) M/M 0.4% -0.7% Japan 01.50 Domestic CGPI (Mar) M/M Y/Y A 0.0% / 2.7% 0.4% / 2.9% 01.50 Import price index (Mar) A-0.5%/22.3% 4.3% / 25.0% UK 12.00 BBC Q1 business survey France 08.45 CPI (Mar) M/M Y/Y 0.5% / 1.7% 0.4% / 1.9% 08.45 HICP (Mar) M/M Y/Y 0.5% / 1.8% 0.4% / 2.0% Italy 10.00 Trade balance (Feb) -2.8405B -4.162B Events 20.00 Early close US fixed income markets 19.00 Fed’s Kohn on economic outlook 21.45 Fed’s Bies speaks in Los Angeles 23.30 Fed’s Olson on US economy AUTHOR- GR...
posted by Gold Futures @ 1:15 AM
0 Comments:
Post a Comment
<< Home