Reply #3: daily dollar watch [View All]

[UpInArms]

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Last trade 84.23 Change +0.11 (+0.13%)

Dollar Recovers From Durable Goods Thanks To Retracement In Oil Prices

http://www.dailyfx.com/index.php?option=com_content&task=view&id=881&Itemid=39

US Dollar

The dollar did it again. Despite the initial knee jerk rally after the horrid durable goods report, the mighty buck managed to recover its stance with only a few nicks and bruises. The increase in crude inventories and less than expected decline in gasoline supplies gave dollar bulls hope that the pocketbooks of US consumers may finally see some sort of relief. Whether this is a last push for production ahead of the summer driving season or a new trend for oil still remains to be seen. There has also been a rumor floating around the markets that the Fed will be dropping the phrase measured from their statement next week. For this upcoming FOMC meeting, the measured phrase is really the card that is in play. Given the mixed results of recent US economic releases (weak durable goods and strong new home sales being the latest), the market is very split on potential changes to statement. Dollar bulls will certainly be disappointed if the Fed chooses to continue raising rates at a "measured" pace, but will probably see more converts to their camp if the Fed does the inevitable. Meanwhile, as early as the beginning of this year, we began alerting our readers about the upcoming retirement of Greenspan on January 31, 2006. The first of what will probably be many front-page cover articles in the months ahead has surfaced about potential replacements for Greenspan. According to an article published in this morning's Wall Street Journal, the top three contenders for Greenspan's post is Martin Feldstein (a Harvard University economist), Glenn Hubbard (Current Dean of Columbia University's Business School), and Ben Bernanke (Fed Governor and soon to be Chairman of the Council of Economic Advisers). Catch the article for a more detailed analysis of each of these men as well as a few "dark-horse" candidates.

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Euro, Dollar, Yen – All Caught in Crosscurrents

http://www.dailyfx.com/index.php?option=com_content&task=view&id=889&Itemid=39

Which is it - serious slowdown or continued growth? In the FX market these days the answer seems to change every half an hour as all G-3 economies report wildly gyrating results on a daily basis.
For trend traders this week has been a true nightmare as EUR/USD broke the 1.2900 barrier only to come screaming back to 1.2980 after shockingly poor US Durable Goods yesterday which recorded the worst decline since 2002. No more than three hours later the pair was back trading near day's lows as oil slipped to $51/bbl on higher than expected inventory numbers.

This type of grinding, directionless range trading is unlikely to change as G-3 economic reports continue to send mixed messages. Tonight's data is a case in point. In Japan Industrial Production unexpectedly fell to -0.3% from 0.1% projected mainly on a large drop in production of train cars and ships. At the same time Japanese PMI rose to 53.3, the highest rate since September 2003. Meanwhile in Europe German unemployment numbers reported the first decline in 16 months decreasing by -79K, but the number is subject to so many adjustments based on new unemployment measurement rules in effect since beginning of the year that the market chose to ignore it. On a more consistent EU definition standards German unemployment remains at troublesome 9.4% level.

Are global economies heading into a funk? Recent economic evidence certainly suggests so. Looking ahead to today's US GDP the market whisper number is already ratcheting down expectations to 3.0% from 3.4% expected. Perhaps the best news for growth bulls is the fact that oil is starting to finally recede from record highs. If crude breaks the $50/bbl and remains in the $40's for most of the summer world economy should receive a healthy boost with the dollar and yen the prime beneficiaries. For now however it's the race for "least worst performer" amongst the majors as volatility continues to shrink and FX markets flounder looking for direction.

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Goodness, Ozy! I almost felt like I should tag the dollar watch (not by mistake) to the Wrapup!

Have a Great Day Marketeers!