Forex rebates on every trade - win or lose!

Yes Hilary, that's what I intend to do. However we're renting the flat we're staying in from a friend who wants paying in Euros. Usually I take very little cash. The 1.44 seems to be about the best on the High Street.

Whipsaw alley on cable at the moment - it doesn't seem to know which direction to go. My guess is that $ strength based on better than expected results - but I'm not playing this game until there's a bit of clarity.

Staggered data releases, mg. IP beats the street.

That means fillyerboots with $

Somebody give it some va va voom. Please!

nbg. I've had enough for today.

Mankywoo
Just gone short cable @120

Have a nice day y'all

Ooops
Out -25 guessed wrong on that one. Should stick to indicators instead of a wet finger in the wind ;(

Forex - Dollar remains lower in late trade on weak CPI report - UPDATE 4
AFX


NEW YORK (AFX) - The dollar fell against its major counterparts Wednesday after, after a softer-than-expected consumer inflation report dampened expectations for more aggressive rate hikes.

In late trade the dollar was down 0.2% at 109.21 yen. The euro was up 0.7% at $1.2107.

Adding to the gloom, foreign capital flows failed to cover the monthly trade deficit - of $57 billion - for the second consecutive month.

'The combination of a negative CPI, weak economic US data (falling retail sales, weakening ISM, slowing payrolls) and US inability to fund the trade deficit present a triple whammy for the US dollar as it not only reduces the need for further Fed tightening and dollar yield accumulation but also raises fears of sustainable deficit financing from abroad,' said Ashraf Laidi, chief currency strategist at MG Financial Group.

The dollar dropped after the Labor Department reported consumer inflation in May declined for the first time in 10 months.

The consumer price index decreased 0.1% in the month, driven by a 2% fall in energy prices, the biggest decrease in energy prices since July 2004.

Food prices rose 0.1%. The core CPI, which excludes food and energy costs, rose 0.1%.

Economists were expecting the CPI to rise 0.1% in May, after a 0.5% gain in April. The core rate was expected to rise 0.2% in May after remaining unchanged in April.

The CPI reading comes a day after producer price data, showing its largest drop in more than two years. See full story.

The tame inflation report was followed by a stronger-than-expected Empire State report, a measure of manufacturing sentiment in the New York area.

The headline June index climbed to 11.7 points from a far weaker-than-expected negative 11.1 reading in May.

The Fed also reported a better-than-expected rebound in industrial production and stronger capacity utilization

'We continued to assume that the general declines in the various factory sentiment measures through the first half of 2005 reflect a downside correction from unsustainably strong levels in 2004, and an adjustment that has coincided with a modest inventory correction over the March-May period,' wrote economists at Action Economics.

Separately, the Treasury Department reported that foreign capital flows rose to $47.4 billion in April from 40.6 billion in March, as foreign central banks bought more Treasury bonds, while falling short of the level needed to cover the massive trade deficit.

Bank of New York Senior Currency Analyst Michael Woolfolk said the inflows were far short of a $70 billion market consensus expectation. In addition, the data showed little evidence of intervention flows from emerging Asian nations, highlighting concerns about whether foreigners will continue to help fund the U.S. deficit.

Overnight, investors had little reaction to the Bank of Japan policy board's widely expected decision by majority vote Wednesday to keep its ultra-easy credit policy unchanged.

The nine-member board voted to maintain the central bank's liquidity target of 30 trillion yen to 35 trillion yen, but will also allow the amount to temporarily drop below the target when market conditions warrant. A minority of members continued to press for a change in the liquidity target.

'When it is judged that liquidity demand is exceptionally weak considering such factors as responses of financial institutions to the bank's funds-supplying operations, there may be cases where the balance of current accounts falls short of the target,' the Bank of Japan's statement said.

The decision means the Japanese central bank will continue its quantitative easing policy of keeping short-term interest rates around zero by flooding the short-term money market with excess cash.

The Japanese currency got support overnight as U.S. Treasury Secretary John Snow kept the pressure on China to revalue its currency, a move that would likely lead other Asian currencies to appreciate.

On Tuesday, Snow said in a speech prepared for delivery to the Centre for Economic Policy Studies that global economic imbalances 'need to be dealt with and this is the time to deal with them,' according to AFX-Asia.

His remarks to the Brussels think-tank re-emphasized the U.S. call for China to introduce flexibility to its exchange rate policy, and said dialogue on the issue is going well.

In his speech notes, he said that 'China is now ready to take immediate and significant action to achieve currency flexibility'.



This story was supplied by MarketWatch. For further information see www.marketwatch.com.

Forex - US dollar rangebound vs euro in Tokyo; EU summit in focus
AFX


TOKYO (AFX) - The US dollar was rangebound against major currencies, including the euro, in early afternoon trade here, with investors awaiting the outcome of the EU summit meeting, dealers said.

EU leaders are holding a summit in Brussels where they are attempting to thrash out a deal on the 2008-2012 EU budget and to decide to what to do about the EU constitution.

At 1.05 pm (0405 GMT) here, the euro was quoted at 1.2103 usd, after trading in a range of 1.2093-1.2120 usd. About two and a half hours earlier in Sydney it was at 1.2101 usd and at 1.2102 usd in late New York trade overnight.

The dollar stood at 108.89 yen, compared to 108.92 yen earlier in Sydney and 108.95 yen in New York trade. It had traded between 108.76 yen and 109.01 yen here.

'The euro bias remains bearish. This is because of political uncertainty in the euro zone, interest rate differentials between the US and Europe and its softer economic growth outlook,' said Satoru Ogasawara, currency strategist at Credit Suisse First Boston.

Against this backdrop, analysts said the market tended to shrug off factors negative for the US, including the Philadelphia Federal Reserve's headline manufacturing index falling to minus 2.2 pct in June from 7.3 in May, the first negative reading since May 2003.

Ogasawara said this was because US Federal Reserve chairman Alan Greenspan had earlier suggested that the Fed would keep its current pace of lifting interest rates.

Ogasawara also said comments by Kansas City Federal Reserve president Thomas Hoenig overnight gave the greenback a lift.

Hoenig said that economists, in general, judge the Fed's neutral rate to be somewhere between 3.5 pct and 4.5 pct, suggesting that the Fed could be poised to put in place a number of additional rate hikes.

'We expect the US unit to remain on a firm footing this year. Our house forecasts that the Fed will raise the federal funds rate to the 4.0 pct level this year,' Ogasawara said, adding that the euro could tumble to 1.18 usd within one month and to 1.15 usd in six months.

He forecasts that the dollar will probably fall against the yen as the Japanese economy has shown some signs of steady recovery. He said the US unit could fall to the 105 yen level in a three-month period.



Tokyo 1.05 pm (0405 GMT) Sydney 11.30 am (0130 GMT)

Oh 'eck - no calendar update this week :(

Sorry Choccy.

I spent the weekend concentrating on my white bits at the expense of the calendar. It's all about priorities.

All is sorted now though.

:o)

Cheers Hils :)
So did I - unfortunately some bits got roasted more than others.

Hil:

Oops, and the FX fairy developed amnesia (no alzheimer's jokes, ladies, please :)

Bloody Capital Spreads - GBP starts tumbling and their FX suddenly goes tits up - conspiracy or cock up - I'm for conspiracy ;(

Oh no, not the old papal conspiracy theory.
Dontcha just hate it when that happens.

BoE MPC's Bean and Bell voted for quarter point rate cut at June 9 meeting
AFX


LONDON (AFX) - Two members of the Bank of England's monetary policy committee surprisingly voted for a quarter point rate cut at the last rate-setting meeting on June 9, with the other seven voting in favour of keeping the key repo rate unchanged at 4.75 pct.

The minutes to the meeting, published this morning, showed that the central bank's chief economist Charlie Bean and outgoing MPC member Marian Bell said a quarter point rate reduction 'might obviate' the need for a larger cut later.

'While there were arguments in favour of waiting for more information before taking action, that risked the slowdown in consumption becoming more entrenched,' they said, according to the minutes.

News that there were two members actually voting for a rate cut may well cement expectations that the BoE will cut interest rates by August.

Most Bank watchers had predicted that a unanimous vote in favour of holding rates, with possibly deputy governor Andrew Large voting for a quarter point hike again.

The minutes showed that Bean and Bell argued that the evidence over the last month was enough to warrant a cut, and pointed to the further weakness in the euro zone, the downside risks to the outlook for growth following disappointing economic news and diminishing demand pressures in the economy.

They also argued that it now seemed that much of the recent rise in inflation had reflected higher oil and other commodity prices through the supply chain, rather than the pressure of excess demand on supply capacity.

'Although output growth had so far been fairly resilient in the face of weaker consumption, GDP growth was likely to be weaker than in the May Inflation Report central projection, notwithstanding the shift in market interest rates (downwards),' the doves said, according to the minutes.

'Inflation might therefore be below target in the medium term,' they said.

In May's Inflation Report, which incidentally was compiled by Bean, the BoE predicted that CPI inflation would rise above target in the short-term but settle back around the 2.0 pct target over the two-year horizon as growth slowed down towards the trend rate, thought to be around 2.5 pct a year.

The majority on the committee agreed that the news on world demand had been slightly on the downside over the last month and that a succession of weaker surveys suggested that the risks to the near-term Inflation Report output projections were on the downside too.

However, they noted that those surveys tended to be drawn largely from manufacturing, which only accounts for around 20 pct of GDP, as against the services sector, which accounts for around 70 pct.

They also noted that the newsflow hinted at a slight easing of labour market conditions.

Overall they said the two key risks identified in the May Inflation Report had concerned the outlook for consumption and the rise in CPI inflation to 1.9 pct and that these risks remained unresolved.

'Although there was no new information on the latter, on the former there were signs that household spending growth might have stabilised, albeit at a low rate,' they said.

In addition, they argued that a rate cut now would be a 'significant surprise' and would run the risk of the inference being drawn that the MPC believed the situation had deteriorated more than it, in fact, had.

'And if the latest consumption indicators, in fact, presaged a return to stronger domestic demand growth, a reduction in rates now might accelerate the recovery in consumption growth and lead to inflationary pressures,' they said.

pp/jkm/

Just tried a quick short on Cable from just below resistance at 1.8226; thank goodness for stops!!!

I've updated the weekly calendar this weekend and I'm happy to update it again next weekend too, but that will be my last time as I shalln't be around after early July.

I don't know whether the FX Fairy will want to continue updating it each week or whether somebody else will want to set up a new thread. I thought I'd give you a little bit of notice so that you can decide what you want to do. I've also got the html saved with all the links from the original header if it's needed.

Hils
Are you running away with Golddog