Buck Bounds On ECB Rate Halt
Dollar index futures
(
DXU0 |
Quote |
Chart |
News |
PowerRating) popped open nearly a dollar.
This move comes as the euro, British pound and yen (recovering) are all trading
lower. Due to their weighting on the dollar index, EuroFX futures
(
ECU0 |
Quote |
Chart |
News |
PowerRating)
are exerting the largest impact, moving down after the European Central Bank
left interest rates unchanged and after the ECB President Duisenberg implied
that rates would not go up soon.
Interestingly on June 8, the ECU0 slashed down after striking
a new high because the ECB raised rates a more-than-expected 50 basis points.
The view on the 50-point move then was that it was too much and would impede a
nascent European economic recovery. Wednesday’s rate decision is having just the
opposite effect in that stagnant european rates are being viewed as euro-negative. Overall, the narrowing interest rate differential between the
US and Europe–and slightly higher continental economic growth– will likely
have the impact of rallying the ECU0 out of its cup with handle.
In another indication of the potential down move in the ECU0
(and conversely up-move in the DXU0), the highly correlated Swiss francs
(
SFU0 |
Quote |
Chart |
News |
PowerRating) is making good for a third day after it registered a 20-day reversal
(sell) signal on the Futures
Indicators List. Strength in the dollar is healthy for the US equity market.
The yen is also lower but its pattern of rising lows still makes it a candidate for additional upside out of a diamond bottom formation.
Crude oil has touched a new contract high on fear that OPEC
will not raise production sufficiently to avert supply shortfalls in the US.
Tuesday’s API report showed gasoline stocks rose and distillates fell. Hence,
unleaded gasoline is down and heating oil gapped open and is rallying