Currency Focus
USD - The dollar rout continues unabatedly further fuelled by the surprisingly low ISM manufacturing number on Friday. The number came out below the psychological threshold of 50 –namely at 49.5. During the Greenspan era ISM numbers below 50 did trigger rate cuts from the FED. No wonder the long US interest rates took a further dive alongside the dropping dollar in the wake of the release. Now Fed are keenly keepinh eye on Core inflation which is at
the higher side. Now the Dollar weakness is purely driven by the people who are more familiar with the slowdown in US Economy. Most of the leading indicators are pointing the Dollars oversold region, still larger part of Dollar selling is not ruled out just coz we need to wait for Fridays crucial data "Non-Farm Payroll". And even we need to wait for ECB President Trichet any dovish on Euro if does so then it'll be a sigh of relif for Dollar.
EUR - Well most of the ECB members are not happy with the Euro gains against the Dollar or even Yen. So this week we have the Interest rate meeting and later a speak from ECB President Trichet. There is room for additional rate hikes in 2007. Survey and hard data have confirmed the strength and resilience of current expansion, particularly in Germany, and liquidity is still ample in the euro area.
GBP - Manufacturers enjpyed a very strong year on significant increase in exports but the real worry comes in 2007 on the sign of slowdown of worlds economy. In the past we saw a good numbers like Construction sector which is in good growth. Inflation is in under control and PMI is optimistic.
JPY - Japans Q3 Capital Spending dropped unexpectedly to 12% worse then expectations of 15.3%. Now the Coincident index and Leading Economic index which are due in this Wednesday to know the Japans Economy clues. On interest rate, BoJ is worried about the business activity which is peaking-out.
AUD - The 3 rate hikes is still not factored into the Aussie Dollar, and if we see on more rate hike in this week then in 2007 housing market, builders and traders will struggle in the second half of 2007. Looking ahead to the next six months, we believe low vacancy rates will push rents higher and that should encourage more building. Overall, we still remain pretty upbeat on house building in Australia.
the higher side. Now the Dollar weakness is purely driven by the people who are more familiar with the slowdown in US Economy. Most of the leading indicators are pointing the Dollars oversold region, still larger part of Dollar selling is not ruled out just coz we need to wait for Fridays crucial data "Non-Farm Payroll". And even we need to wait for ECB President Trichet any dovish on Euro if does so then it'll be a sigh of relif for Dollar.
EUR - Well most of the ECB members are not happy with the Euro gains against the Dollar or even Yen. So this week we have the Interest rate meeting and later a speak from ECB President Trichet. There is room for additional rate hikes in 2007. Survey and hard data have confirmed the strength and resilience of current expansion, particularly in Germany, and liquidity is still ample in the euro area.
GBP - Manufacturers enjpyed a very strong year on significant increase in exports but the real worry comes in 2007 on the sign of slowdown of worlds economy. In the past we saw a good numbers like Construction sector which is in good growth. Inflation is in under control and PMI is optimistic.
JPY - Japans Q3 Capital Spending dropped unexpectedly to 12% worse then expectations of 15.3%. Now the Coincident index and Leading Economic index which are due in this Wednesday to know the Japans Economy clues. On interest rate, BoJ is worried about the business activity which is peaking-out.
AUD - The 3 rate hikes is still not factored into the Aussie Dollar, and if we see on more rate hike in this week then in 2007 housing market, builders and traders will struggle in the second half of 2007. Looking ahead to the next six months, we believe low vacancy rates will push rents higher and that should encourage more building. Overall, we still remain pretty upbeat on house building in Australia.
posted by Naveen Pantera at 9:30 PM
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