Feb 26 2007
Daily Forex Analysis
Daily Forex Analysis
USD
The USD was mixed against all other majors on Friday to end the week, on the back of weak US economic data and impressive data from other regions especially the Euro zone. In addition last week’s Consumer Price growth was stronger than expected for the month of January which created a wave of concerns about inflationary pressures, as the pressure on the USD could continue to grow as we head into the busy data week. This week we are expecting durable goods, consumer confidence, existing and new home sales, preliminary fourth quarter GDP, Chicago PMI, personal income and manufacturing sector ISM. Aside from Chicago PMI and ISM, the market is not expecting dollar friendly data, especially at the beginning of the week. There is a virtually empty economic release calendar for today and it will be difficult to see the Dollar dipping too far and with key supports close at hand the likelihood for today is one for a tight range trading day with a bias to a recovery following an early dip lower.
EUR
Last week the German IFO business sentiment survey for Feb came in weaker than expected but did little to alter the outlook for the Euro-zone interest rates to rise in March. This helped the EUR finish the week strongly. In addition the EUR momentum against the JPY continued and reached a new record high of 159.61 last Tuesday. The UN’s International Atomic and Energy Agency announced on Thursday that Iran has not only failed to suspend all nuclear activities by the deadline, but has set up over 300 centrifuges for industrial enrichment. Meanwhile, Iranian nuclear officials claimed the suspension of uranium enrichment was unacceptable and against its sovereign rights. The EUR gained ground after this news and erased earlier USD technical gains. Today is a weak data day and aside from German Consumer Confidence at 7:00AM GMT, the Euro-Zone is not expected to see any important news. However supporting news from last week still has some influence over the bullish trend direction for the EUR. The following week, traders’ attention will mostly be centered on the US market as most of the major data is expected from there, and most of it will probably boost the EUR up a bit , if all goes as expected.
JPY
The Bank of Japan raised interest rates on the belief that its economy is normalizing and its consumer is growing stronger, yet its currency keeps falling. The JPY remained fairly soft against the USD but slipped to record lows against the EUR reaching 159.59 before surrendering to gains at 159.37. Market players are not expecting the BOJ to take aggressive action in the future either. The latest interest-rate decision was not even unanimous, and the government is likely to exert all its influence to stop interest rates rising too quickly, therefore carry trades will remain attractive to traders. No major news is expected to come from the Japanese market today, and the JPY will be submitted to external price action, especially US biased in this rich US event week.
Courtesy of Forexyard
