Greenspan’s comments failed to have much effect on the dollar yesterday, with only a mild dollar sell off during the day, quickly erased overnight.
Against the Yen the dollar has remained consistently firm, despite soaring Japanese stock markets and a generally better economic outlook.
GBP/EUR remains unchanged, trading within a tight range again yesterday after the severe falls last week. The failure of sterling to retrace even a third of last week’s losses is probably an indication of further weakness to come.
The focus today will be on the US Trade Deficit at 13:30. We are expecting a deficit between $59.5 – $60.0 Bn for August, up from $57.9Bn in July. The market is already braced for a bad figure, but anything over 60 could result in dollar weakness this afternoon. This is likely to be offset by Friday’s Retail Sales and Industrial Production data which is likely to add to the inflationary theme, cementing the Fed’s intentions to raise rates again in November.
GBP USD – Support 1.7400, 1.7310 then 1.7269(July lows)
Resistance 1.7453 then 1.7520
GBP EUR – Support 1.4500 then 1.4400
Resistance 1.4600 then 1.4650
DATA: US Jobless Claims 13:30
US Trade Balance (Aug’) 13:30
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