In European Hands
In European Hands
Thursday morning brings a lot of fundamentals to absorb, including the Bank of England (07:00 EDT) and ECB (07:45 EDT) rate decisions, the Federal Reserve auction of Treasury debt, Home Sales (10:00 EDT) data from the U.S. and Canadian Building Permits (10:00 EDT). There will very likely be a lot of whipsaw action, and there will be some moves that are heavily reversed as data hits.
Overnight most pairs made an initial technical bounce against the dollar, not moving to far, but just enough to take the edge off the heavy moves that the greenback has made recently. The dollar has found strength from many quarters over the last month, and from sources that have come together to align in such a way that experienced market participants are looking at possibly being sustainable, here are three of them;
Global commodity prices have dropped dramatically, inducing a relief rally on the dollar based side of commodity trades as the speculative interest banks twelve month long profit runs in wheat, corm and ore, all of which are dollar positive signs in the near-term.The bond markets are pushing yields higher, the U.S. government bonds are not far off their European counterparts now, even with the Federal Reserve stuck at their 2.00% overnight interest rate. Bonds increasing their yields is the equivalent to a FED interest rate increase, it is dollar positive.Gold and oil prices are returning to a point where they will soon start to impact the inflationary reads like CPI, and that in turn will positively impact Durable Goods, Retail Sales, and Consumer Sentiment. It by no means a signal that the worst of the sub-prime fall-out is behind the market, but is a near-term dollar positive.
Overnight the equity markets have traded without commitment, and have left Wall Street futures numbers in the red, not by much, but as it stands the markets in the U.S. will be below fair value at the open. Oil and gold are trading up by about 0.3%.
The dollar index traded through the 200 day Simple Moving Average on Wednesday, and it will be interesting now to see how that 74.50 resistance area will be seen. That answer is in the hands of the Bank of England and ECB today.
The LFB-Forex.com
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