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Forex · News · Forex ForecastsNEWS / Forex Forecasts |
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Dollar is still strong, slight correction is possible…Rtae dynamics and recommendatins on USD-CHF and USD-CAD.
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08:05 06/17/2004
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Dollar is still strong, slight correction is possible…Rtae dynamics and recommendatins on USD-CHF and USD-CAD.
Weakness of EUR/USD rate that followed overcoming the key level at 1.2100 and rate’s inability to rise higher technically brought the pair to quick fall almost two patterns down. “Eurobulls” loose their followers, as players doubt the probability of near rise of common European currency.
Fundamental impulse for further strengthening of American currency was economic data received from the U.S. and rise of futures on American stock exchange indexes. On the given background, gold rate fall was also recorded. Let us remind once again that economic indicators that came out yesterday were significantly higher than forecasted, thus showing high activity on the real estate market and active growth of industrial production. New homes made up 1.967 million homes in May in the U.S., construction permits issued in May equaled 2.077 million.
Meanwhile, the greatest surprise was industrial production index in the U.S that made up +1.1% in May in the U.S., forecasted +0.6%, previous +0.8%. That is the highest index value in the last 6 years.
Economic potential capacity index was also unexpectedly high. Forecasted as 77.4, it made up 77.8 in May in the U.S., which is the highest in 3 years. Previous value of the index equaled 76.9.
Inflationary pressure issue is the weak point of American economy now due to steep rise in oil quotas. Recent statements of U.S. officials of higher rank and FRS chairman Alan Greenspan note that FRS is ready to do everything needed to save “price stability in order to provide confident economic growth in the U.S.”.
In one of his recent statements, Alan Greenspan said that FRS might give up its “deeper” monetary policy, in case inflation rises, and no one will be able to state that FOMC decisions are smooth and not radical.
Such serious actions might be based on the fact that “high prices for oil, if they remain high, will drive up consumer prices, as well as the overall level of prices”.
According to economic review of Federal Reserve System of the U.S., “Beige book”, steady growth of economic activity was recorded in April and May in the U.S., as well as improvements in the sphere of employment, while price rise in the majority of regions was insignificant.
Today, we’ll get a full picture of employment sphere and will clear up the PPI situation. Let us remind that jobless claims in the U.S. in the week ended June 12 is to be released at 12:30 GMT today (forecasted 330 000 claims, previous 352 000 claims).
PPI in the U.S. in May (forecasted +0.6% per month, previous +0.7% per month) and PPI, excluding food and energy, (forecasted +0.2% per month, previous +0.2% per month) are also scheduled for today.
Leading indicators index in the U.S. is scheduled for 14:00 GMT; Philadelphia Fed index in the U.S. in June (forecasted +26.0, previous +23.8) is due 16:00 GMT.
All the listed above indicators are of great significance prior to FOMC meeting due the end of this month. That is why we recommend keeping long positions on USD-CHF and USD-CAD, pulling closer protective stops for the moment of release (in case there are negative surprises).
Recommendations: in a whole, we do not expect serious changes in market situation and are intended to keep open long positions on dollar till FRS meeting.
Recommendations: in a whole, we do not expect serious changes in market situation and are intended to keep open long positions on dollar till FRS meeting.
The forecast was created by trans1.
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