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FX Day Trading - 25 Feb 2010
Greece Back in the News
US New Home Sales at Record Low
Dollar Rates to Stay Low for Six Months
The climate change faction is increasingly worried that some people do not take at face value its claim that the world is getting warmer because of anthropogenic carbon dioxide emissions.
To convince the sceptics, scientists intend to re-analyse 150 years worth of data so that it fits more neatly with the case for global warming. Now that's what you call seasonal revision.
Also seasonally adjusted (but perhaps not so blatantly) were yesterday's figures for US new home sales.
At an annual rate of 309k sales were down by -11.2% on the month and hit an all-time low (records began in 1963).
The data were so far adrift from the +3.2% investors had been expecting that they were at a loss to know how to react.
At first they sold the dollar because of the figures' negative implications for the US economy. It was not long before they bought them back, having considered the global picture.
Similar confusion was evident in the market's reaction to Federal Reserve Chairman Ben Bernanke's testimony to congress.
Although he described current monetary policy as 'extremely accommodative' (i.e. interest rates are going up) he went on to say rates were likely to remain 'exceptionally low for an extended period' (i.e. they are not going up yet).
To assist investors with their interpretation of the chairman's comment, St Louis Fed president James Bullard told reporters later that 'an extended period' meant 'six months'. So were they telling the market that US rates would be going up in six months' time? Nobody could figure it out.
The other story on Wednesday surrounded the re-emergence of the Greek Problem.
Standard & Poor's and Moody's ratings agencies both popped up with warnings that Greece's rating could be cut again by the end of March (S&P) or within months (Moody's).
It cannot have helped matters that Theodoros Pangalos, Greece's deputy prime minister, blamed his country's problems on the theft of Greek gold reserves by Nazi Germany. At least he did not mention beach towels.
Abusing the passers-by is not the most obvious strategy for success when you are sitting behind a 'Please give generously' placard.
After a week or so on the back burner it looks as though the euro's exposure to Club Med will once again be in the spotlight.
Data released overnight showed an improvement in Australia's leading index, from -0.3% to +0.6%, and a substantial jump in New Zealand business confidence from 38.5 to 50.1.
Swiss and German unemployment, French consumer confidence and Italian business confidence open the batting for Europe, followed by UK business investment and a string of pan-Euroland confidence measures.
The CBI's distributive trades survey will provide a new take on UK retail sales. On offer from the States are durable goods orders, the housing price index and the weekly jobless numbers. The Fed chairman will be on The Hill for another day of testimony about the economy.
That the pound lost ground across the board yesterday was far easier to understand than the various gains it had made over the previous couple of days.
What will be interesting to see today is how investors position themselves in the run-up to tomorrow's revised assessment of fourth quarter GDP.
Having been caught on the hop by worse than expected figures for Q3 and Q4, it may be that they will plan for similar disappointment this time around.
That could mean a softer pound today and a positive reaction when the revised figure comes in at, say, +0.4%. Lottery ticket anyone?
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'FX Day Trading 25 Feb 2010', Article by Moneycorp, last update: 25-Feb-10
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