|
|
Enron Mail |
[IMAGE] Forums Discuss these points in the Forums: Forexnews Forum T= echnicals Live Charts Analysis available from: Cornelius Luca J.P. Chorek= Technical Research Ltd. Charts & News featuring Standard & Poor's = Interest Rates US: Japan: Eurozone: UK: Switzerland: 2.5% 0.15% 3.7= 5% 4.5% 1.75-2.75% [IMAGE] =09 [IMAGE] USD Slips On Sagging Confid= ence Ahead Of This Week's Data October 29, 7:00 AM: EUR/$..0.89811 $/JPY..= 122.27 GBP/$..1.4457 $/CHF..1.6385 USD Slips On Sagging Confidence Ahead O= f This Week's Data by Jes Black At 2:00 PM US Sept Fed Budget (exp 27.1 bl= n, prev 79.9) Confidence in the dollar started to slip away last Thursday= as investors braced for a potentially poor round of economic data this wee= k. It all starts with consumer confidence on Tuesday and ends with the Octo= ber jobs report on Friday. But USD saw more than a little profit taking in = the European session on Monday as traders squared positions ahead of the st= orm. EUR/USD rose to a one-week high of 89.92, just lacking the momentum t= o get it over the 92-cent mark. The other European majors rose in tandem, c= limbing to respective one-week highs of $1.4479 against the pound and 1.641= 1 Swiss francs to the dollar. Sterling also benefited from speculation of M= &A-related inflows. News that U.S. finance house Babcock & Brown may bid fo= r British rail network operator Railtrack and a weekend newspaper report th= at German media giant Bertelsmann was eyeing Britain's Carlton Communicatio= ns added to sterling's appeal, after better than expected GDP data last wee= k. But more surprisingly was the yen's resilience in the face of a further = downgrade by the Bank of Japan and their decision to not try and help the e= conomy with more easy monetary policy. USD/JPY fell to a session low of 122= .13, but regained key support around 122.25 later in the European session. = Given the past two week's of optimism in the face of weak earnings reports= , US economic data this week will give a better clue as to how severe the d= ownturn will be. Most forecasts are expected to show sharp declines and con= firm the US edged closer to recession after the September 11 attacks on the= United States. Final October releases include the Conference Board's confi= dence survey, Chicago PMI, NAPM, the Labor report, this week's jobless clai= ms and the key Q3 GDP preliminary report. This will be the most widely watc= hed release because if the Q3 GDP figure proves to be worse than the negati= ve 0.9% expected, it will have a doubly harsh effect on USD as traders also= anticipate a larger decline in the October Labor report. In contrast, ha= lf the Eurozone nations will be on holiday this Thursday, which will lead t= o thin markets and high volatility with the bulk of US data due on Wednesda= y and Thursday. Therefore, downside risks to USD are enhanced, with only UK= and Eurozone PMI data to weigh on the euro and pound this week. Comments f= rom ECB member and Bundesbank president Welteke echoed the ECB's recent ass= essment by saying the central bank would cut rates if it could do so witho= ut hurting price stability. Welteke also saw Eurozone economic growth signi= ficantly below potential at the present and that a return to long term grow= th of 2.5% will be delayed. But, expansionary effects of this years interes= t rate cuts are still in pipeline, he said. Meanwhile, Q3 company earnings= reports will continue to play an important role in this week's US stock ma= rket and therefore the dollar. So far, over 3/4 of the companies reporting = matched or exceeded projected earnings targets, albeit for drastically lowe= r forecasts. A majority of companies are reporting after the bell and given= this week's upcoming data, trade is likely to be thin ahead going into Wed= nesday. Both Dow and Nasdaq futures are in negative territory. Today's ble= ak economic and inflation outlook in Japan also failed to spur investors to= go long the dollar against the yen. USD was unable to benefit from the Ba= nk of Japan's decision to keep monetary policy unchanged despite their fore= cast of a deteriorating economy and rising deflationary concerns. The BoJ's= decision to hold interest rates near zero (ZIRP) and maintain a floor of 6= trillion yen in reserves did not impress FX markets. But inaction was ex= pected and offers to sell USD above 122.50 capped any dollar gains. Dealers= say failure to extend gains beyond 123 level indicates that a minor top ha= s been formed around last week's two-month high of 123.35. USD/JPY support = seen at 122.30/40, and a break of 122.25/30 opens the way for a breach of t= he key 122.00 level, from which point most traders based their new long pos= itions and where stop loss orders are likely to be placed. USD/JPY now hove= ring around 122.30. The BoJ also offered a sharp downward revision in its = own economic growth and price outlooks for fiscal 2001 and 2002, saying the= economy was in a "severe" adjustment phase. The Bank expects a further fal= l in exports and output to affect domestic demand in the second half of thi= s fiscal year and not reach a bottom until the second half of FY02/03. Afte= r that, the bank expects exports to recover, but sees prices on continued, = gradual declining trend in FY01/02, and FY02/03. The BoJ board's full outlo= ok for FY01/02 GDP ranged from -1.6% to -0.6%. FY01/02 CPI ranged from -1.3= % to -0.9%. However, the bank's own figures are not seen as making any diff= erence in monetary policy because BoJ Governor Hayami sees structural refor= m as the key to growth, not more money. In other news, Finance Minister Sh= iokawa said the government will still aim for the 30 trillion JGB cap, but = should remain flexible to unforeseen changes in economic environment. But w= orrying markets is what those "unforeseen changes" might be. If that includ= es today's downward revision to growth and inflation, then markets will be = very disappointed with the new Koizumi government's promise of reform. Any = violation of this key reform is likely to push the yen lower. Shiokawa als= o said standards should be set for banks to foreclose on borrowers with exc= essive debts. "There are companies that are borrowing from banks that haven= 't paid any dividends to shareholders for some years, whose debts have been= forgiven, but are still unable to recover. Banks should be able to foreclo= se on such firms," he said. "There should be a set of standards that makes = it easier for banks to do so. That would be one way of resolving bad loans.= " The Financial Services Agency has been leading efforts to resolve the mas= sive bad loans at banks as part of the government's plans to restructure th= e country's financial system but so far has made little headway. =09[IMAGE= ] Audio Mkt. Analysis GBP Ralies, JPY Falters Articles & Ideas Specu= lative Flows Point to Further Euro Losses ECB KEEPS RATES UNCHANGED AT 3.= 75% Articles & Ideas Forex Glossary Economic Indicators Forex Gui= des Link Library [IMAGE] =09 =09=09[IMAGE][IMAGE] [IMAGE][IMAGE]=09 =09=09 This e-mail is never sent unsolicited. If you wish to unsubscribe f= rom this or any other Forexnews.com newsletters, please click here . =09
|