| 5/21/2008
2:50 PM: EUR/$..1.5784 $/JPY..103.00 GBP/$..1.9690
$/CHF..1.0263 AUD/$..0.9634 $/CAD..0.9846
FOMC Downbeat on Econ,
USD Slumps
The dollar¡¯s slide extended into
the Wednesday session amid a dearth of fresh US
economic data. Crude oil surged to yet another
record at $132 per barrel, pressuring the greenback
lower.
The minutes of the Fed¡¯s last meeting
were released earlier and revealed a mixed assessment,
offering a downbeat outlook for the economy and
expectations for risks to inflation to remain.
The decision to cut rates at the April 29-30th
meeting was a ¡°close call¡±,
with members expressing concern about upside inflation
risks with clear signs that inflation expectations
had risen. Further, the Fed minutes noted that
it saw no sign of bottoming in the housing market
and expects inflation to remain elevated this
year while the jobless rate is seen rising significantly.
Euro Propped to One-Month High
Traders have pushed the euro higher against the
dollar, to a new one-month high at 1.5781 on a
combination of upbeat Eurozone economic data and
surging crude oil prices. Germany¡¯s
May Ifo sentiment survey shrugged off estimates
for a slight decline, with the current conditions
survey climbing to 110.1 versus calls for a dip
to 108 from 108.4 in April. The business climate
component also improved, rising to 103.5, and
beating out forecasts for a minor decline to 102
from 102.4 a month earlier.
The stronger economic report from Germany reinforces
sentiment that the ECB will maintain its tightening
bias ¨C and keeping its yield differential
over the US. The calendar for Thursday is light,
consisting of March industrial orders, which are
seen down 0.4% versus 0.6% in February and considerably
lower at 4.7% from 9.9% a year earlier.
EURUSD remains firm near 1.5770 with resistance
seen at 1.58, followed by 1.5840 and 1.59. Subsequent
ceilings are eyed at 1.5940, followed by 1.5970
and the pair¡¯s all-time high at 1.6018.
Support begins at 1.5730, followed by 1.57 and
1.5670. Additional floors will emerge at 1.5630,
backed by 1.56 and 1.5550.
|
