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Forex · News · Forex ForecastsNEWS / Forex Forecasts |
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Alan Greenspan’s words strengthened U.S. dollar…Rate dynamics and recommendations on EUR-USD and GBP-USD.
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12:06 06/09/2004
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Alan Greenspan’s words strengthened U.S. dollar…Rate dynamics and recommendations on EUR-USD and GBP-USD.
Alan Greenspan’s speech, conducted in London via satellite connection, granted major support to the dollar yesterday and it still experiences that support today since the beginning of the European session. In his speech, FRS chairman gave a characteristic to the overall economic situation in the country in the last 3 years. He noted that for the first time ever production growth did not result in nonfarm payrolls’ increase. Companies’ managers found methods of increasing efficiency other than hiring new staff but using the labor of part-time employees, which affected dynamics of inner demand that did not support goods’ supply.
However, the situation had changed in the last half a year. Economic indicators showed payrolls’ increase in all sectors and deflation problem that might have been caused by weak demand was longer on the agenda. Rising oil and gaz prices strengthened inflationary pressure on the economy. We really want to believe that supply that was increased by OPEC countries would manage to satisfy demand for oil-products. Despite increase in nonfarm payrolls, jobless claims’ rise strengthen inflationary pressure. The given facts might force FRS to take serious measures. It could be that FOMC would raise the rate of refinancing 50 base points higher rather than forecasted 25 points.
This news, definitely, supported the dollar. On the other hand, European currencies’ positions had been weakened mainly from pound sterling point. Ever since the beginning of the year, the news that came from Britain was pessimistic.
In Britain, deficit of foreign trade balance rose to 3,6 billion pounds sterling in April. In February-April, deficit dropped to 9.7 billion pounds from 10.9 billion pounds in the previous three-month period. Commodity trading deficit made up 4.7 billion pounds in April against 4.2 billion pounds in March; services-trading profocit made up 1.1 billion pounds against 1.2 billion pounds.
Trade balance deficit in trading with the EU countries made up 2.2 billion pounds against 2.1 billion pounds. Trade balance deficit in trading with non-EU countries made up 2.5 billion pounds against 2.1 billion pounds.
As for Germany, consumer prices data did not add optimist to the investors. Consumer prices rose 2.0% in May compared to the last year’s level and after 1,6% gain in April, reports Federal Statistical Services.
Recommendations: it is very much likely that breaking-out the levels of support at 1,83 on GBP and 1,215 on EUR will be a good signal for opening shorts.
Recommendations: it is very much likely that breaking-out the levels of support at 1,83 on GBP and 1,215 on EUR will be a good signal for opening shorts.
The forecast was created by trans1.
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