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ECB Officials Say They May Raise Rates |
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Written by Jason
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Monday, 26 September 2005 |
ECB officials Axel Weber and Erkki Liikanen said rates may be raised if there are signs of inflation subsequent to higher oil costs and stronger economic growth. The current ECB rate is 2.00% as it has not been raised since 2000. Despite hurricane Rita delivering less damage than expected and outright avoiding some major refineries, crude oil was trading higher today up to $66 per barrel because of the slow recovery of production in the Gulf of Mexico. Production in the Gulf amounts to 24% of U.S. output.
 ClockworkFX's Daily Forex Insight - September 26, 2005 (85.46 KB)
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China Widens Band Against Non-Dollar Currencies; Euro Sinks |
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Written by Jason
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Friday, 23 September 2005 |
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China’s central bank widened the band around non-dollar currencies today to 3% from 1.5% previously as G7 finance ministers met in Washington possibly. China may have done this with the intent to take extra pressure off calls for the country to continue revaluing its currency. With Rita downgraded to a Category 4 storm, traders are using this as an excuse along with the Yuan widening event and continued German political uncertainty to buy the dollar.
The euro-dollar is approaching 1.1950/65, a familiar price level where medium-term traders loaded up prior to the upward correction to 1.2590. Long-term studies call for a Wave 5 down on the daily chart with a current target of 1.1580, which would severely dampen the euro-dollar’s strength on the weekly chart. This level will only be achieved if the euro-dollar breaches 1.2030 and 1.1950. To counterbalance the downward strength, the single pair must reach 1.2315 first. Dollar-yen technicals remain favorable to reach our first upside target of 112.90. To the downside, there is significant support emergent at 111.06, a triple bottom on the short-term charts. Meanwhile, the euro-yen remains neutral as the pair consolidates in a nicely formed triangle on the daily chart. Stops are noted below 134.90 – the daily low and lower bound of the triangle. ClockworkFX's Daily Forex Insight - September 23, 2005 (84.55 KB)
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Euro-dollar Downside Eyed Despite Near-term Choppiness |
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Written by Jason
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Wednesday, 21 September 2005 |
Downward pressure on the euro resumed today despite Rita barrelling toward the U.S. coast. As previously stated, we expected speculators to take advantage of the cheap dollar pursuant of short-term dollar strength. Traders continue to downplay the possible effects of Rita as it recently lost strength & instead placed bets that the Fed will continue raising interest rates. Japan’s Finance Minister Sadakazu Tanigaki is slated to meet with U.S. Treasury Secretary John Snow tomorrow and possibly discuss China’s Yuan revaluation. This could be seen as adding pressure to China to continue letting the Yuan appreciate, thus adding strength to a less than sanguine yen as Chinese exports become more expensive relative to other Asian countries.
ClockworkFX's Daily Forex Insight - September 22, 2005 (84.79 KB)
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Japan Trade Surplus Shrinks; Rita Upgraded To Cat 5 |
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Written by Jason
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Tuesday, 20 September 2005 |
The yen struggled after reports that Japan’s trade surplus shrunk 79.7% from a year ago to 116.3 billion yen according to the Ministry of Finance. Also worth noting is a 21 percent jump in oil imports which comes as no surprise with all the supply worries as of late. With Rita bearing down on the Gulf and approaching a record internal temperature, speculators have driven the price of crude to $67 per barrel – the highest price in a week. It’s unclear what toll this hurricane would take on the economy after land fallout, but seeing as how the Fed downplayed Katrina, we can assume it cannot keep a soft stance incessantly. With the dollar being offered across the board, traders may buy into the drop speculating that the dollar will continue to remain strong on the back of positive interest rate differentials and relative stability versus the other major currencies.
ClockworkFX's Daily Forex Insight - September 21, 2005 (85.22 KB)
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Inflation Expectations Adding To Dollar Strength |
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Written by Jason
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Thursday, 15 September 2005 |
The U.S. dollar extended its rally today on the back of higher treasury yields from speculation that the Fed will continue to raise rates to counter inflation. A surge in prices paid by the New York and Philadelphia factories contributed to this speculation. The readings were 53.4 from 29 and the latter 52.7 from 25.9 respectively. The euro-dollar penetrated our daily uptrend line (see below) and established a daily low of 1.2195. It is suspected that central banks were the bidders are this level preventing further slippage for the single pair. Merkel’s dwindling lead in German election polls continue to put selling pressure on the euro and rising inflation concerns in the U.S. are supporting the dollar. A break of 1.2195 will exploit the euro-dollar to decent support at 1.2160/70 with a break of this area leaving the pair exploitable to 1.2000. With the daily trend beginning to shift, upside hurdles appear strong at 1.2250 and 1.2330.
ClockworkFX's Daily Forex Insight - September 15, 2005 (83.74 KB)
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