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Strategies & Market Trends : The Options Box -- Ignore unavailable to you. Want to Upgrade?

To: bonnuss_in_austin who wrote (7939)	12/1/2000 10:22:35 PM
From: X Y Zebra	Read Replies (1) \| Respond to of 10876

Now: What are the plans for Dec. Fed meeting? not a clue... my gut... Perhaps a change in bias ? considering... (read the bottom bolded part by me) FOREXNEWS.COM is sponsored by MG Financial Group (http://www.mgforex.com). The "TIP OF THE MONTH" has been designed to help traders take advantage of the unique features of trading on Dealstation 2000. To read the latest article, please refer to: mgforex.com FOREX NEWS NOW GIVES YOU THE LATEST TECHNICAL ANALYSIS as provided by Technical Research Ltd. forexnews.com ************************************************************ EURO : IS THAT IT ? By Ashraf Laidi-MG FINANCIAL GROUP The single European currency is increasingly changing its identity, moving from a sickly young unit to a nimble and opportunistic currency. The currency is now able to take advantage of recurring signs of weakness in the other two major units; US dollar and Japan. Resurfacing evidence of a cooling in the US economic engine and deteriorating economic fundamentals and rising political uncertainty in Japan have all gone punished by the euro. This week alone, the euro has risen 5% against the dollar and the yen, hitting a 4-week high against the former and 3-month highs versus the latter. The single currency is also gaining appreciably against the sterling, hitting the 61.40 pence mark for the first time in 10 weeks, on rising market consensus that the Bank of England has shifted its monetary policy into neutral mode from that of a tightening mode. THIS WEEK'S CATALYSTS TO THE EUR/$ RISE: It all started this Monday when the euro jumped by over a full cent at the release of the 3.9% drop in October existing home sales in the US, which fell to their lowest in 3 months. The euro added on more than a half a cent on Tuesday when US durable goods fell 5.5%, their biggest decline since July's 13% drop, and consumer confidence once again undershot expectations by falling a one year-low at 133.5. The dollar had a relative reprieve on Wednesday when US Q3 GDP was revised from 2.7% to 2.4% and not to 2% as many had feared. The figure, however, was still the lowest quarterly growth reading in three years. The single currency continued its ascend on Thursday amid a sharp rise in US weekly jobless claims and an unexpected fall in personal incomes. Jobless claims rose by 19,000, attaining their highest increase since the July 1998. This lifted the less volatile 4-week average to 343,000, a level not seen since January 1999. Personal incomes fell 0.2%, posting their first decline since December 1998, while Personal Consumer Expenditure rose by a tame 0.2%. DEJA VUE ? Exactly 4 weeks ago, the euro rose 5% against the dollar, and it was a weak release of these particular indicators (home sales, consumer confidence, weak Q3 GDP and weakening Oct NAPM) that triggered that rise. EURO'S TENDENCY TO RALLY ON WEAKNESS OF OTHER FX HAS ALREDAY BEEN SHOWN IN PRIOR RALLIES. The rally of May 19-30 was triggered on the BoE's resolve to weaken the pound, Dollar declines prompted by Japan's tightening rate rhetoric, and Switzerland's claims that it might join the Eurozone. The rally of June 02-07 was partially triggered by ECB rate hike expectations and a weaker than expected May jobs report in the US. NO STRONG DATA FROM THE EUROZONE. The strength of the euro is highlighted by its ability to shrug off the latest weakness in the Eurozone Purchasing Managers Index. Today's release of the headline PMI figure fell to a 15-month low in November at 54.6, while the prices paid paid index hit its lowest level since December at 66.7. Nonetheless, the PMI figure remains well above the 50 mark, which denotes the cross-over point between a contraction and expansion in the manufacturing sector. This contrasts with the US NAPM which fell below 50 for the 4th consecutive month, hitting 47.7 in November. THEN WHAT? This week's rise leads to wonder whether the euro will hit the elusive 90-cent target by year-end. For this to happen, the US economy must continue to slow (even a soft landing will do). If we get a strong signal from the Fed later this month that it is done tightening, then the euro could pick up on the yield differential argument and climb to higher grounds. We could get an answer as early as next Friday, when the November jobs report tells us how's Greenspan's "poll of workers" indicator is doing. Considering last week's 19,000 rise in jobless claims, the labor report is likely to register a broad cooling, hitting all of the variables in the reports (jobless rate, payrolls and even average hourly earnings). This might be sufficient in alleviating the Fed's constan preoccupation with "unusually tight labor markets" and lead it to remove the 8-month old tightening bias. Should this happen, the euro might well deliver the much anticipated climb to 90-cents by Christmas time. -Nov 30