Market is in thought after Friday rally…Rate dynamics and recommendations on USD-CHF and USD-CAD. by OpenForex.com

news

job

forum

Forex · News · USMarket

NEWS / USMarket

Market is in thought after Friday rally…Rate dynamics and recommendations on USD-CHF and USD-CAD.

11:23 06/21/2004

Market is in thought after Friday rally…Rate dynamics and recommendations on USD-CHF and USD-CAD. Today, Monday June 21, no important economic releases are expected. Forex market activity is rather low after Friday dollar rally. Exchange rates fluctuate within tight ranges. Let us remind that Friday decline of the dollar against major currencies could have been predicted. Not only depressing data on the deficit of balance of payments in the U.S., which came out significantly higher than forecasted and reached the record level, but a whole series of factors were the reason for it. Thus, balance of payments made up –144.9 billion dollars in the first quarter in the U.S., forecasted –140.5 billion dollars and having previous value of –127.0 billion dollars. However, we should not that decline of American currency against other major currencies started far earlier (5-6 hours earlier) than data on U.S. balance of payments had been released. Scarcely had the rate tested important level of resistance at 1.2150 at American session, EUR-USD rose 175 points higher during the day. Market analysts note that geo-political tensions put pressure on the rate of the dollar, as well as data on U.S. balance of payments. That, in its turn, stimulates great demand for Swiss frank and rise in prices for oil. Besides, recent unexpected decision of the Bank of Switzerland to raise rates makes investors pay attention to more “calm” currencies. However, there are no fundamental grounds for significant rise of European currencies. Thus, the chief economist of ECB, Otmar Issing, “buried” hopes of some investors for rapid hike of interest rates in Europe. Let us remind that he said that current level of inflation in the region gave no reasons for concerns and that interest rates would be raised only if price rise contributed to rise of wages. Member of ECB Board of Governors, Weber, was even more specific, having stated that there were no reasons for ECB rate hike at that moment. Recommendations: today, wait and watch price behavior in the zone of day key support at 1,2320-50 on USD/CHF (in case the rate of the dollar continues declining). Price drop will change market sentiments. On EUR-USD rate, the given zone corresponds to 1,2200-30 levels. USD/CAD might give us another chance to buy it from low levels of 1,3510-50. So far, stay out of the market. Recommendations: today, wait and watch price behavior in the zone of day key support at 1,2320-50 on USD/CHF (in case the rate of the dollar continues declining). Price drop will change market sentiments. On EUR-USD rate, the given zone corresponds to 1,2200-30 levels. USD/CAD might give us another chance to buy it from low levels of 1,3510-50. So far, stay out of the market.

The forecast was created by trans1.