Thursday, November 30, 2006

Forex News: GBP Surges to 14-year High, USD Resumes Slide

Forex News

At 8:30 AM US October core PCE m/m (exp 0.1%, prev 0.2%) October core PCE y/y (exp 2.3%, prev 2.4%) October PCE Deflator y/y (exp 1.4%, prev 2.0%) October Personal Spending (exp 0.1%, prev 0.1%) October Personal Income (exp 0.5%, prev 0.5%) Canada Q3 GDP annualized (exp 2.0%, prev 2.0%) Canada September GDP (exp 0.0%, prev 0.3%) At 10:00 AM US November Chicago PMI (exp 54.5, prev 53.5) At 6:30 PM Japan October National CPI ex-food (exp -0.1%, prev 0.0%) Japan October National CPI (exp -0.1%, prev -0.3%)

The dollar relinquished all of its previous session’s gains versus the euro and sterling during London trading, negating any positive momentum from Wednesday’s upbeat US GDP and Beige Book report. The selling that ensued pushed the greenback to fresh 14-year lows against the sterling at 1.9578 and falling just shy of the recent low versus the euro at 1.3210. Traders remain determined to test the bearish sentiment of the market, thus ignoring any recent dollar positive news such as hawkish Fed rhetoric and evidence that the US economy may be headed for a soft-landing.

The data deluge continues today with the releases of October core PCE, PCE deflator, personal spending, personal income and November Chicago PMI. The core PCE is forecasted to slip to 0.1% from 0.2% the previous month and down to 2.3% from 2.4% a year earlier. The deflator is expected to be lower at 1.4% compared with 2.0% previously. Personal spending and income are seen unchanged from their prior month’s readings. More importantly though, will be the Chicago PMI report due out at 10:00 AM, which will be viewed as a proxy to the manufacturing ISM report also scheduled for this week. Consensus forecast is for PMI to improve to 54.5, up from 53.5 from October.


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