| 3/24/2008
3:15 PM: EUR/$..1.5420 $/JPY..100.82 GBP/$..1.9846
$/CHF..1.0204 AUD/$..0.9058 $/CAD..1.0179
USD Edges in Thin Session
The dollar continued to rebound versus the yen,
edging up to 100.84, in a holiday-thinned Monday
session ? with Europe and Asia still closed for
the Easter holiday. Economic data released earlier
today also provided support for the greenback,
with existing home sales in February reversing
January?s 0.4% decline, rising by 3.9% to 5.03
million units. Further, the revised offer by JP
Morgan to acquire Bear Stearns at $10 per share,
quadruple its initial offer, sent US equity bourses
rallying with the Nasdaq advancing by more than
3%, and both the Dow Jones and S&P 500 up
by over 1.5%.
The US economic calendar this week consist of
the Richmond Fed survey, March consumer confidence,
building permits, durable goods orders, new home
sales, final Q4 GDP, core PCE, personal consumption,
personal income, and the University of Michigan
consumer sentiment. The final reading for Q4 GDP
is seen unrevised at 0.6% on a quarterly basis
and unchanged at 2.6% y/y.
We expect the dollar to continue edging higher
against the majors in the week ahead, with initial
targets of 1.52 versus the euro and 1.96 against
the British pound. The correction in commodities
is also seen extending, thereby pressuring the
commodity currencies such as the Aussie and Canadian
dollar lower.
The main event risks over the next few months
will be central bank meetings from the FOMC, ECB
and RBA. We expect the FOMC to cut rates by 50-basis
points when it next meets at the end of April
bringing the benchmark lending rate to 1.75%.
The RBA is seen lifting its key interest rate
by 25-basis points to 7.5% on April 1st. Meanwhile,
the ECB is largely expected to leave rates unchanged
when it deliberates policy on April 10th ? but
will likely reiterate its hawkish bias against
inflation. Also to be closely watched is the G7
Finance Ministers meeting in Washington, DC on
April 12th-13th. Although the likelihood for a
coordinated intervention to prop up the dollar
among the G7 remains a low probability event,
the recent sharp fluctuations and volatility in
the currency market will no doubt bring fx to
the fore of discussions.
|
