Wednesday, April 25, 2007

Data to Drive FX by Korman Tam

At 4:00 AM Germany April IFO Index (exp 108.0, prev 107.7)
Germany April IFO Current Conditions (exp 112.6, prev 112.4)
At 4:30 AM UK Q1 GDP q/q (exp 0.6%, prev 0.7%)
UK Q1 GDP y/y (exp 2.8%, prev 3.0%)
At 8:30 AM US March Durable Goods Orders (exp 2.5%, prev 1.7%)
At 10:00 AM US March New Home Sales (exp 888k units, prev 848k units)

The dollar remains under pressure against the major currencies amid renewed concerns of further deterioration in US economic fundamentals. Yesterday’s dismal existing home sales, which posted its steepest decline since 1989, pushed the greenback to fresh 2-year lows versus the euro and just shy of its all-time low against the single currency.

Economic data will remain the primary focus among fx traders for the coming session, with durable goods and new home sales slated for release. The key concern among markets is the direction and timing of any FOMC policy moves in the coming months. Given the lingering weakness in the housing market and gradual decline in overall economic activity, we feel the next rate move will be a shift to an easing stance. However, the timing will hinge on the pace of deterioration in economic fundamentals. The March durable goods report, which is a typically volatile reading, is expected to improve to 2.5% versus 1.7% in February. Meanwhile, the new home sales are forecasted to improve 888k units, up from 848k units a month earlier.

No comments: