Correction is continuing…Rate dynamics and recommendations on EUR-USD and GBP-USD. by OpenForex.com

Correction is continuing…Rate dynamics and recommendations on EUR-USD and GBP-USD.

07:29 04/01/2004

Correction is continuing…Rate dynamics and recommendations on EUR-USD and GBP-USD. Series of negative corporate U.S. news and expecting positive results by the end of the fiscal year that ended on March 31 put the pressure on the dollar. As Chicago department of Institute for Supply Management informed on Wednesday, Chicago PMI fell 57,6 compared to 63,6 in February. Any index value higher than 50 points at increase in the region’s business activity, index value lower than 50 points at activity reduction. Chicago index is calculated by means of interviewing 200 supply managers that work for production sector. Index value showed that business activity in production sector of Chicago and the region has been rising at the high rate during March, though slower than in February. Economists expected that index would fall slightly. According to Reuters survey, the average forecasts presupposed index value to make up 61,5 in March. In the middle of the March Japanese newspapers contained messages saying that Japanese financial authorities were going to significantly reduce the volume of currency interventions by the end of current financial year that ended on March 31. Ministry officials have been repeatedly stating in the recent days that currency policy would remain unchanged. But currency traders’ observations and the results of trades show that the presence of the Bank of Japan on the international exchange market was less visible in the second half of March. On Tuesday, the yen broke out the level of 105 yen per dollar. The given level was regarded as “the last frontier” of Japanese exporters and the ministry of finance, respectively. The yen rise speeded up after that and on Wednesday the yen entered the range with the top border of 104 yen per dollar. There also appeared another factor – that is OPEK decision to reduce quotas for oil extraction, which evidently result in price increase. Increase in the prices for oil always negatively affects the rate of the dollar against major currencies. The EU indexes show that economic situation in Europe is getting better. Index of Eurozone economic sentiments approached 96.0 points in March against revised 95.9 points in February. That was due to rise in construction and retail sectors of economy. The given data was provided by European Commission. Separate European Commission report on business climate in Eurozone shows that the given index has been reducing for the second straight month, having fallen –0.10 in March (that is the five-months minimum) from 0.10 in February. Consumer confidence remained unchanged on the level of –14. Recommendations: Stay out of the market so far. Recommendations: Stay out of the market so far.

The forecast was created by trans1.