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Dollar slipped against the European currencies on Wednesday after a batch of solid U.S. economic data did little to shake expectations that the Federal Reserve would keep interest rates steady for some time. The greenback strengthened briefly after a report showed that the U.S. core PPI rose by 0.2% m/m in December which was higher than economists' forecast of 0.1%.
Another report also showed that U.S. industrial production increased by a solid pace of 0.4% m/m in December, mainly due to an expansion in mining in manufacturing sectors. However, as the interest rates market has fully priced in expectations that the Fed would keep rates unchanged at 5.25% at its January and March meetings, traders were reluctant to build up fresh long dollar positions versus European currencies on yield differentials. Investors did not pay much attention to the lesser-than-expected net capital flows into U.S. in November ($68.4 bln against the forecast of $77.5 bln) as the amount was more than enough to cover the trade deficit for that month.
As a result, euro and cable rebounded from 1.2897 to 1.2951 and from 1.9603 to 1.9724 respectively. The dollar also retreated briefly from 1.2515 to 1.2454 against the Swiss franc. On the other hand, usd/jpy maintained a relatively firm undertone and rose to 120.88 due to speculation that the Bank of Japan would leave interest rate unchanged on Thursday's meeting, which is likely to attract further cross-selling against high yielders.
Thursday will see the release of Japan's tertiary industry and leading indicator, as well as Swiss ZEW business sentiment index. Data from the U.S. include CPI, jobless claims, real earnings, housing starts, building permits and Philadelphia Fed survey. Fed chairman Bernanke will also testify before the Senate Budget Committee on U.S. economic prospects. ------------------------------------------------------------
Updating time : 17/01/2007 19:18 GMT
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Newly enhanced Home Page, come visit www.AceTraderFX.com and see these free info:
● Previous day's Market Highs & Lows ● Intraday & Daily Recommendations
● Daily Market Outlook ● Daily Technical Outlook ● Market Moving News
● Market Review ● Economic Indicators ● Our Recommended Trades
******************************************************
Dollar slipped against the European currencies on Wednesday after a batch of solid U.S. economic data did little to shake expectations that the Federal Reserve would keep interest rates steady for some time. The greenback strengthened briefly after a report showed that the U.S. core PPI rose by 0.2% m/m in December which was higher than economists' forecast of 0.1%.
Another report also showed that U.S. industrial production increased by a solid pace of 0.4% m/m in December, mainly due to an expansion in mining in manufacturing sectors. However, as the interest rates market has fully priced in expectations that the Fed would keep rates unchanged at 5.25% at its January and March meetings, traders were reluctant to build up fresh long dollar positions versus European currencies on yield differentials. Investors did not pay much attention to the lesser-than-expected net capital flows into U.S. in November ($68.4 bln against the forecast of $77.5 bln) as the amount was more than enough to cover the trade deficit for that month.
As a result, euro and cable rebounded from 1.2897 to 1.2951 and from 1.9603 to 1.9724 respectively. The dollar also retreated briefly from 1.2515 to 1.2454 against the Swiss franc. On the other hand, usd/jpy maintained a relatively firm undertone and rose to 120.88 due to speculation that the Bank of Japan would leave interest rate unchanged on Thursday's meeting, which is likely to attract further cross-selling against high yielders.
Thursday will see the release of Japan's tertiary industry and leading indicator, as well as Swiss ZEW business sentiment index. Data from the U.S. include CPI, jobless claims, real earnings, housing starts, building permits and Philadelphia Fed survey. Fed chairman Bernanke will also testify before the Senate Budget Committee on U.S. economic prospects. ------------------------------------------------------------
