This suggests that the BRC retail sales number that is due tomorrow runs a greater chance of coming out weak than strong. However, US service sector ISM will be the market's true mover since traders have been in the habit of shrugging off weak UK data. There was a minimal reaction to last week's drop in the CBI distributive trades survey and Gfk consumer confidence.
Japanese Yen
After selling off in the Tokyo trading session to a new record low against the Euro, the Japanese Yen quietly recovered its losses in the European and US trading sessions. Japanese economic data has been mixed recently with the latest batch leaning to the negative instead of the positive. Total cash earnings were flat in October, which was weaker than expected while third quarter corporate expenditures also grew less than expected. The Ministry of Finance's lack of concern for the value of the EUR/JPY is being taken as a green light for further gains in the currency. The longer the yen remains weak against the Euro, the more stimulus it provides for the export dependent economy. We can only rely on comments from the ECB to deliver a top in the currency pair. Thursday's ECB monetary policy meeting may be a perfect opportunity for the central bank to do so.
Commodity Currencies (CAD, AUD, NZD)
The commodity currencies were all stronger against the US dollar today despite slightly weaker oil prices and neutral gold prices. With no economic data on the calendar, the Canadian dollar firmed as the country's stock market hit a new record high. The Bank of Canada is scheduled to make a decision on interest rates tomorrow but no changes are expected. The central bank should also remain neutral on policy given the surprise drop in GDP and overall trend of weaker economic data. The Reserve Bank of Australia will also be announcing interest rates tomorrow evening or Wednesday Australian time. No changes are expected from the RBA either especially after last night's weaker building approvals and company profits.
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Dollar Stalls Ahead of Service Sector ISM (page 2 of 2)
- Tuesday, December 05 - 2006 at 03:13
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Kathy Lien, Chief Strategist, Daily FXTuesday, December 05 - 2006 at 03:13 UAE local time (GMT+4)
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This article was updated on Sat May 26 2007.
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