13:54 2007/04/25
Euro's Path to New Record Still Inevitable, JPY Awaits Home Sales
Dollar pushes modestly higher after US durable goods orders rose 3.4% in March, exceeding forecasts of a 2.5% increase, while durables excluding transportation rose 1.5%, exceeding expectations of a 1.1% rise. This second monthly positive reading in the headline figure following the 9% drop in January is helping to cement market expectations that the Fed will stay on hold in H1. Market expectations of a Fed cut by Q4 stand at 80%. We continue to see the possibility of a Fed cut in Q2 due to the onset of a market-driven systemic risk that would thwart liquidity such as a deepening crisis in the sub-prime lending market.Due at 10 am are US new home sales expected to have risen 4.7% to 890 mln units last month after two consecutive monthly declines of 4.0% and 16% in February and January. Yesterday??™s larger than expected drop in existing home sales was received relatively by the dollar at a time when the currency came off its session highs. A positive reading in new home sales combined with an increase in new home sales could especially jolt USDJPY higher amid rising equity market optimism, specifically with the Dow chasing the unprecedented 13,000 mark. The Fed??™s Beige Book survey on regional business and economic activity is due at 2 pm EST may not be a market mover unless a stronger language is used to describe the slowdown in residential housing and manufacturing. Euro nears all time highs amid IFO and growth upgrade
USDJPY turns to US data ahead of holiday Sterling seen pulling back to $2.0
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