EUR/USD finds its self in tight ranges as the week gets underway in North America with central bank bids guarding the downside and medium-term sales still capping rallies. Sustained jawboning by the ECB is having limited impact with tightening fully anticipated several more times as 2007 unfolds.
Dealers await a flood of US data from mid-week on to help determine the course of US monetary policy. One thing is clear; The Fed is unlikely to cut any time soon. USD bears continue to find excuses for the unexpected resilience of the US economy. The latest is relatively warm weather through the fall of 2006. One factor supporting the USD in a macros sense is the stable oil price. The New York Times highlighted Saudi desires to see prices hold in the $50 region.
One reason is to keep demand from slumping as a result of too-high prices while an ancillary benefit is that it pressures its rival Iran which needs higher prices to keep a restive populace at bay. Small stops are seen above the 1.2930/35 level near-term while offers return toward 1.2950/60. A break above 1.2960 suggests a short to medium-term bottom is in place.
No comments:
Post a Comment