Forex - Dollar steady but outlook uncertain as players brace for data heavy week
Mon, Nov 13 2006, 11:26 GMT
afxnews.com
LONDON (AFX) - The dollar was steady in a quiet start to the European trading session but analysts warned that the heavy data calendar this week presents opportunities for both gains and losses for the US unit.
"This week should see the dollar remaining under pressure, but there is a chance that Asian currencies will take over from European currencies to lead the dollar's decline," BNP Paribas analysts said.
They believe US retail sales data on Tuesday will add to the pressure on the dollar as the effects of the weaker housing market becomes apparent.
Yet others believe there may not be enough momentum to push the dollar lower, however.
"The more worries over US growth intensify, the more likely that sentiment toward growth in the rest of the world deteriorates. This would feed through to pressure on risk assets, supporting the dollar," said Steve Pearson at HBOS.
"Sharp declines in copper and oil, in addition to signs that global equity markets are losing momentum are a warning," he said.
He also believes that the minutes of the last US rate setting deliberations may come in a little more hawkish than predicted.
"We doubt they will validate the market's dovish interpretation. As such there is real possibility of a dollar positive surprise," said Pearson.
Concerns about a slowdown in global growth also add to the importance of Japanese GDP data due out tomorrow.
Over in the UK, a set of mixed producer price data left the pound little changed.
UK PPI data was firmer than expected, but showed the headline annual input and output price inflation at their lowest rate for a couple of years.
Stuart Bennett at CALYON said the mixed tone makes it difficult to interpret the figures.
"Overall, however, with headline PPI at a two year low, it does bode well for CPI data and hence will support UK interest rate doves," he added.
UK CPI data are due tomorrow while the Bank of England projections for growth and inflation are due Wednesday. The central bank hiked its base rate last week, to 5.00 pct from 4.75 pct.
The former is predicted to have picked up due to higher university fees and food prices. The latter, meanwhile, is predicted to reveal little change in the outlook for GDP growth but a slightly lower inflation profile.
London 1050 GMT Singapore 0740 GMT
US dollar
yen 117.80 up from 117.37
sfr 1.2410 up from 1.2376
Euro
usd 1.2845 down from 1.2863
yen 151.35 up from 150.95
sfr 1.5947 up from 1.5917
stg 0.6735 up from 0.6723
Sterling
usd 1.9070 down from 1.9126
yen 224.64 up from 224.44
sfr 2.3670 up from 2.3666
Australian dollar
usd 0.7651 down from 0.7661
stg 0.4010 up from 0.4004
yen 90.12 up from 89.92
sivakumar.sithraputhran@afxnews.com |
