The importance of today’s data on the U.S. economy can hardly be overestimated…Rate dynamics and recommendations on USD-CHF and USD-CAD. by OpenForex.com

The importance of today’s data on the U.S. economy can hardly be overestimated…Rate dynamics and recommendations on USD-CHF and USD-CAD.

10:34 06/15/2004

The importance of today’s data on the U.S. economy can hardly be overestimated…Rate dynamics and recommendations on USD-CHF and USD-CAD. Yesterday, EUR/USD rate reached new, almost monthly minimum at 1.1950 during Asian trades. Later on, it recovered to 1.2100 level of resistance at European and American trades because of the unexpectedly positive data on Italian industrial production and weak data on US trade deficit. Let us remind that yesterday’s data testifying the unexpected growth of US trade balance deficit provoked fall in quotations of American stock exchange indexes. The U.S. trade balance made up –48.3 billion dollars in April, whereas forecasted –45.0 billion dollars. The previous value was revised from –46.0 billion dollars to –46.6 billion dollars. As a result, the outcome turned out to be weaker than forecasted and approached the record level. Economists are seriously concerned about exports’ reduction, especially about exporting in China, on the background of increased imports from the given country. Economists fear that such data on trade balance can significantly reduce GDP indicator in the second quarter. However, yesterday brought good news too. Retail sales index in the U.S. in May made up +1.2%, whereas forecasted +1.0% and having its previous value at –0,6%. Excluding auto, retail sales index equaled +0.7% in the U.S. in May, forecasted as +0.4% and having its previous value at –0.1%. It is natural that the given data indicates high consumer demand and strengthens FRS rate hike expectations. In a whole, investors keep their attention fixed on the last U.S. data. Market participants think that that very data will be of great importance at the forthcoming FOMC meeting that is to decide upon raising interest rate target. A whole series of significant economic news is scheduled for today. They are likely to be reflected in currency pairs’ movement dynamics. Besides, today the U.S. Department of Commerce is to publish data on purchases of American assets made by foreign investors the previous month. Traditionally, the given data has a great impact on the rate of the dollar. We strongly recommend paying attention to the following releases that are scheduled for 12:30 GMT: - Business inventories in the U.S. in April (previous index equaled +0.7%); - NY Fed Empire State manufacturing index in the U.S. in June (previous value equaled 30.2); - PPI in the U.S. in May (forecasted +0.4% per month, previous value equaled +0.7% per month); - PPI, excluding food and energy, in the U.S. in May (forecasted +0.2% per month, previous value equaled +0.2% per month); - CPI in the U.S. in May 9forecasted +0.5% per month, previous value equaled +0.2% per month); - CPI, excluding food and energy, in the U.S. in May (forecasted +0.2% per month, previous value equaled +0.3% per month). “Redbook” report for the previous week is scheduled for 12:55 GMT. Preliminary value of Michigan sentiment index in the U.S. in June (forecasted 90.5, previous value equaled 90.2) is scheduled for 13:45 GMT. Recommendations: we assume that the above mentioned data can hardly be overestimated. Our recommendations are as follows: keep positions that you opened on USD/CHF and USD/CAD on Thursday and push protective stops closer to current levels, so that to protect them from unexpected “surprises”. On USD/CHF stops should be arranged at 1,2429 and on USD/CAD at 1,3550. Recommendations: we assume that the above mentioned data can hardly be overestimated. Our recommendations are as follows: keep positions that you opened on USD/CHF and USD/CAD on Thursday and push protective stops closer to current levels, so that to protect them from unexpected “surprises”. On USD/CHF stops should be arranged at 1,2429 and on USD/CAD at 1,3550.

The forecast was created by trans1.