NEWS / Foreign Exchange

Daily FX Wrap for Thursday 19th April 2007

Overview

The US dollar traded weaker against major currencies overnight as investors continued to chase yields amid concerns that slowing economic activity in the US will lead the Federal Reserve to cut interest rates. Continuing interest-rate increases in the Euro zone as well as already high yielding countries such as Australia and New Zealand, combined with concerns about the strength of the US economy, are keeping the US dollar under pressure.

The Sterling reached a 26-year low against sterling following UK inflation figures released on Tuesday suggesting that the Bank of England will continue to raise rates while the euro advanced to 2-year highs.

So far today the big news has been China's decision to postpone the release of GDP data until later in the day, and CPI data until tomorrow. This has prompted the market to speculate this data could be strong, and lead to another rate hike, possibly 50bps. Asian stockmarkets have remained weak all day, and yen crosses have lost ground as traders unwind carry trades.

Euro's found support at 1.3580 in Asian trade, and should target the all-time highs around 1.3665 before the weekend. Precious metals remain poised, and could easily slip lower, particularly Silver.

Data for today

For today:

Buy EUR/USD around 1.3590, stops under 1.3560

For more ideas please email: tradingdesk@pinnacleforex.com