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NEWS / Forex Forecasts

USDCHF, USDCAD Market is extremely volatile, however the basic currency pairs remain in borders of trading ranges...

15:47 09/07/2006

So, made the next attempt of strengthening, dollar, not having found the fundamental reasons for growth, returned to before starting levels against the European currencies.

Let's remind that though yesterday's data confirmed the tendency of growth of the American economy, however, as well as the Federal Reserve expected rates of this growth are slowed down.

So, the revised value of labor productivity in the USA for the second quarter, at the forecast of +1.6 %, and the previous value of +1.1 %; made +1.6 %. Economists point out that value of the index is maximal since third quarter of 2000.

Another important parameter for experts – ISM service index in the USA for August, at the forecast 54.9, and the previous value 54.8; made 57.0.

Experts note that on a background of cooling of housing market minimal for last five years the unemployment rate and reduction of oil prices from record tops support growth of personal spending that affects positively the US economy.

It is remarkable that growth of business activity in service sphere of the USA, including banks, construction companies and operators of retail trade, is connected the last month with increase in number of orders and reduction of expenses in the given sector.

For economists the publication of the review of Federal reserve system of the USA "Beige Book", indicated that growth of the world energy prices while is not shown on a rate of inflation is especially informative.

At the same time, the review confirmed fears of delay of rates of economic growth in the country.

As a result USA "Beige Book" data strengthened expectations of "pause" in decisions on change of the basic discount rate in the USA.

However, some FRS representatives are anxious about growth of labor cost in the USA, specifying, that it can urge on development of an inflationary spiral even more.

So, Richmond FRB Head Jeffrey Laker on Tuesday in interview to USA Today expressed doubts in occasion of that the moderate economic growth in itself will lead to decrease in inflation.

Let's notice that at last FRS meeting on August, 8th Laker disagreed with FOMC decision not to change the rate.

In interview to the newspaper Laker declared: "I do not think that the moderate growth in itself will lower inflation. The moderate growth does not change inflation. Central Banks change inflation".

Specifying last data, Laker noticed: "I see risks of that inflation can become stronger, or grow in comparison with where it is now, and we already see signs of that it can happen because of acceleration of charges on remuneration of labor".

Besides in Laker’s opinion growth of the index of business activity should reduce fears of that the two-year-old cycle of increases of FRS interest rate can lead to sharp falling of rates of economic growth.

Today, except for the announcement of results of two-day meeting of Monetary Policy Committee of Bank of England at 11:00 GMT, the publication of the important economic American parameters is planned.

So, at 12:30 GMT the jobless claims in the USA for a week by 02.09 will be known. We shall remind that the forecast of value is 314 thousand, and the previous value was 316 thousand.

And later, at 14:00 GMT the index of inventories in the USA for July will be released. We shall remind that the forecast +0.7 %, and the previous value +0.8 %.

We still adhere a sight for the market, stated in our previous comments - we forecast correctional growth of the dollar against franc then we wait for new long-term decrease in the American currency.

Therefore aggressive players should open dollar/franc purchases from the purposes 1.2650.

As for the dollar/Canadian rate we suggest to keep a waiting position. Yesterday's decision of Governing Council of Bank of Canada to leave the basic interest rate at a former level of 4.25 %, keeps uncertainty around further dynamics of the pair.

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19/12 21.15
TickerBidAsk
USD/CHF1.15601.1562
GBP/USD1.99541.9956
USD/JPY113.4100113.4300
EUR/USD1.43521.4354
AUD/USD0.85770.8581
USD/CAD1.00521.0056
EUR/GBP0.71920.7194
EUR/CHF1.65951.6599
EUR/JPY162.7900162.8300
GBP/JPY226.3000226.3600
GBP/CHF2.30702.3080
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