The forecast was created by trans1.
| Risk are counter-balanced…Rate dynamics and recommendations on EUR-USD and GBP-USD. |
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10:35 06/02/2004 |
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Risk are counter-balanced…Rate dynamics and recommendations on EUR-USD and GBP-USD.
Differently-directed but equally strong forces still have the hold of the market. We can say that risks are counter-balanced now. Oil market situation continues to seriously affect the dollar. Price for Brent oil make had set another record at London exchange, having risen $2.5 to $39 per barrel. Market is expecting two key events. The first one is OPEC meeting due Thursday that will be devoted to oil prices rise and perspectives of reducing quotes for lowering demand and easing price pressure on the U.S. and European economies. On Friday, we are expecting unemployment rate report of FRS U.S. The reduction of the given indicator will be an ambiguous signal, meaning that rates would be raised no later than the second quarter, which is definitely to affect the rate of the dollar. The European Union is making an attempt of putting the pressure on the oil market. Eurozone finance ministers called for coordinating measures on preventing threats for economic rise, created by high prices for oil, which might also result in inflation acceleration.
Excellent fundamental data on the U.S. economy strongly supported the dollar. ISM services index showed the growth of business activity:
ISM services index – employment is on the highest level since April 1973;
ISM services index – import orders 59.8 against 58.5 in April;
ISM services index – new export orders 60.6 against 61.0 in April;
ISM services index – production 64.8 against 67.0 in April;
ISM services index – prices paid 86.0 against 88.0 in April;
ISM services index – new orders 62.8 against 65.0 in April;
ISM services index – 62.8% against 62.4 in April.
The Department of Construction, construction spending made up $970.4 billion, which is 2.4% higher than in March. That indicates strengthening of activity in construction sector.
Pound sterling is getting popular among investors due to expecting the Old Lady (the Bank of England) rate hike and due to growth of sales.
Sales balance is +51% compared to April’s +30% .
Currency market risks are counter-balanced but the possibility of the dollar rise that might occur in the nearest perspective prevails. That is why we recommend closing out long positions on EUR and GBP, abstain from opening shorts until Friday labor market release.
Currency market risks are counter-balanced but the possibility of the dollar rise that might occur in the nearest perspective prevails. That is why we recommend closing out long positions on EUR and GBP, abstain from opening shorts until Friday labor market release.
The forecast was created by trans1. |
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