Finotec News Archive - July 02 2008
Dollar trading at a three week low before the employment release
U.S. companies cut jobs in June for the first time in four monthsTammy Wally
02 July 2008
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| EUR/USD | USD/JPY | GBP/USD | USD/CHF | |
|---|---|---|---|---|
Resistance | 1.6020 1.5990 1.5870 | 107.20 107.00 106.45 | 2.0045 2.0005 1.9975 | 1.0310 1.0270 1.0230 |
Support | 1.5785 1.5720 1.5680 | 105.00 104.45 104.10 | 1.9880 1.9810 1.9780 | 1.0130 1.0015 1.0000 |
The dollar traded near a three-week low against the euro before an industry report today that economists predict will show U.S. companies cut jobs in June for the first time in four months. The U.S. currency also traded near a three-week low versus the yen before government data tomorrow that may show employers in the world's biggest economy reduced staff numbers for a sixth straight month, prompting traders to pare bets the Federal Reserve will raise interest rates. ``Buying the dollar now seems to be the wrong move,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``Weak numbers from the labor market are sure to push the dollar lower. You can't deny that there are sufficient reasons to worry that the U.S. economy will slow.'' The dollar is currently trading at $1.5826 per euro as of 7:46 am, GMT from $1.5793 yesterday.
The ECB will boost its benchmark rate a quarter-percentage point to 4.25 percent, according to 57 of 58 economists surveyed by Bloomberg News. ECB executive council member Lorenzo Bini Smaghi said yesterday the bank's inflation-fighting mandate means it acts faster than the U.S. Fed. President Jean-Claude Trichet said June 25 that the ECB is ``in a state of heightened alertness'' on prices. The ECB has kept its benchmark rate at 4 percent since June of last year. The Fed lowered rates seven times between September and April, to 2 percent from 5.25 percent.
Yen sales by Japanese individual investors on the Tokyo Financial Exchange reached the highest since August yesterday as they bet the currency will extend its worst quarterly loss against the U.S. dollar since December 2001. Members of the public including pensioners and businessmen accelerated purchases of foreign currencies as this week's gain in Japan's currency provided an opportunity to buy higher-yielding assets in Australia and New Zealand at cheaper levels. The highest yen sales in almost 11 months came as a Bank of Japan business confidence survey raised speculation the central bank will need to keep its benchmark interest rate at 0.5 percent this year. The USD/JPY is currently trading at 106.28 as of 8:09 am, GMT.
Finotec Analysis Team
02 July 2008
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