No releases are scheduled for today…Forecast on the dynamics of USD/CHF and USD/CAD rates. by OpenForex.com

No releases are scheduled for today…Forecast on the dynamics of USD/CHF and USD/CAD rates.

08:34 05/24/2004

No releases are scheduled for today…Forecast on the dynamics of USD/CHF and USD/CAD rates. No releases are scheduled for today. Investors will sum up the testimonies made last weekend. Let us remind, that Finance Ministers of G 7 and organization of petroleum exporting countries (OPEC) representatives met this weekend. Though currency market situation was not planned to be discuseed at a meeting of the Great Seven, the problem of record increase in raw oil prices is of vital importance for all financial markets. Let us also remind that all that occurs on the background of numerous statements of American officials who say that basic interest rates can be raised in the near future. So, the exchange rate of the dollar was supported by statement made by the secretary of the U.S. Department of Commerce Snow, who told, that FRS would raise interest rates the nearest months, and that it would not produce a negative effect on the outlined high rates of American economy’s growth. However, the general tone of statements made by majority of FRS officials is that the rates would be raised very smoothly for a rather long period. As the importance of oil prices for leading world economies can hardly be overestimated, we think it necessary to get into details of the given topic. Prior to OPEK meeting, the prices behaved extremely volatile on the background of rumors about the forthcoming decision on increasing the quotes for oil extraction. Prices were sharply reducing, then, pushed by geo-political situation aggravation, and were soaring up again to another historical records. As a result, prices significantly reduced on Friday prior to OPEK session. At the end of week tenders, the price for barrel of oil had fallen below psychologically key $40 at the New York exchange. The meeting of OPEK members took place this Saturday inAmsterdam. The President of OPEK Purnomo Jusgiantoro stated that the organization would favor price reduction in oder to strengthen economic situation in the world. But, as contradictory points of view are often expressed at such sessions, OPEK members did not arrive at any concrete conclusion on quotas increase issue. Purnomo JUsgiantoro had specified the reasons of prompt rise in prices and attributedthe following to it: geo-political factors\' aggravation, increase in world demand and, specifically, Chinese demand, and fears of possible gasoline shortage in the USA and other industrially developed countries this summer Of all the members that were present at the meeting, only representatives of Saudi Arabia had taken concrete measures on restraining rise in prices. They declared about substantial increase in oil shipments on the eve of the meeting. The others stick to upholding their corporate interests so far. As a result, it is supposed that OPEK will discuss the further policy concerning oil extraction at the official meeting in Beirut on June, 3. Besides, newly made statements of FBI officials, who say about the possibility of militant attacks on the USA territory before the presidential elections, do not add stability to American currency. The release of extremely important parameter – the US consumer confidence index - is scheduled for tomorrow. There is a probability that high prices for oil and gasoline can considerably weaken the value of this parameter. Then, the IFO index of business confidence in Germany will be published on Wednesday. We expect, that the market will react very sensitively to the release of the mentioned indexes. However, the main weekly release will be the final value of the U.S. GDP for the 1st quarter. Let us remind, that after the disappointing initial data, when value equaled only 4.2 % against expected 5-6 %, the market expects specified data with a great attention, and any significant change from the initial data will sharply change position of the American currency. One should not be inattentive to weekly jobless claims on Thursday, as in case of weak data, they will make us suppose that rate hike will be a bit postponed ad that will, evidently, provoke the fall of the dollar rate. Recommendations: today, we recommend wait and see. Arrange postponed orders for selling USD/CHF from 1,2680 – 1,2700, which is the key support of the rate. 1,2550 will be the short-term target of selling, which will be replaced by 1,2350, as soon as the earlier mentioned level has been passed. However, steady rise of the rate higher than 1,29 will be the signal for canceling the above-mentioned postponed order. Recommendations: today, we recommend wait and see. Arrange postponed orders for selling USD/CHF from 1,2680 – 1,2700, which is the key support of the rate. 1,2550 will be the short-term target of selling, which will be replaced by 1,2350, as soon as the earlier mentioned level has been passed. However, steady rise of the rate higher than 1,29 will be the signal for canceling the above-mentioned postponed order.

The forecast was created by trans1.