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European and US summary

USD Slips, ECB & BoE Unchanged

Thu, May 8 2008, 22:30 GMT
by Korman Tam

Forexnews.com

5/8/2008 3:20 PM: EUR/$..1.5400 $/JPY..103.90 GBP/$..1.9525 $/CHF..1.0514 AUD/$..0.9432 $/CAD..1.0166

USD Slips, ECB & BoE Unchanged

The dollar eased against the euro and the yen in the Thursday session, falling to 1.5441 and 103.42, respectively. Central bank decisions garnered the lion’s share of the attention today, with the European Central Bank and the Bank of England both announcing rate decisions in the morning.

The US economic calendar was light today, which saw weekly jobless claims improve to 365k versus 380k a week earlier. Meanwhile, wholesale inventories posted a 0.1% decline in March compared with a 1.1% increase in February. Friday’s data will see the March trade deficit, expected shrink to $61.3 billion down from $62.32 billion in February.

 
Euro Edges up on ECB

The ECB, as expected, left monetary policy unchanged when it announced its decision earlier today holding rates steady at 4.0%. Bank President Trichet reiterated the ECB’s hawkish bias, expecting risks to inflation outlook to remain clearly on the upside and must ensure current high inflation remains temporary. Further, Trichet added that the Eurozone is “currently experiencing rather protracted period of high inflation”. His comments propped the euro higher, reinforcing sentiment that the ECB will likely maintain its hawkish bias for the remainder of the year and preserving the yield differential over the US, which is seen to be euro positive.

EURUSD trades near the 1.54-level, with interim resistance eyed at 1.5440, followed by 1.5480 and 1.55. Subsequent ceilings are seen at 1.5530, backed by 1.5560 and 1.56. On the downside, support is eyed at 1.5360, followed by 1.5320 and 1.5280. Additional floors are eyed at 1.5250, followed by 1.52 and 1.5170.

Bank of England Unchanged

The Bank of England kept rates unchanged at 5%, stabilizing the sterling’s losses for the time being. Heading into the decision, rumors for a surprise rate cut given weak economic conditions in the UK, had weighed on the sterling – pushing it to multi-month lows. Nonetheless, the BoE will likely cut rates in June due to the lingering weakness in the housing market so we view any rebounds in the currency to be selling opportunities.

Published on  Thu, May 8 2008, 22:30 GMT

Archive

• USD Eases on Data, Oil
  Published On Tue, Aug 19 2008, 20:10 GMT
• USD Rally Pauses
  Published On Mon, Aug 18 2008, 19:57 GMT
• GBP Pounded by Inflation Report
  Published On Wed, Aug 13 2008, 21:30 GMT
• USD Rallies, Awaits ECB & BoE
  Published On Wed, Aug 6 2008, 22:26 GMT
• FOMC Unchanged, USD Holds Gains
  Published On Tue, Aug 5 2008, 22:47 GMT

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