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Video for February 25th, 2008 (2 min 39 sec): Quiet Fundamental Docket Puts Carry Trade at Forefront UK Mortgage Approvals Rebound in January Mortgage approvals in the UK rebounded from December's all time low, boosted by strong re-mortgaging activity. A separate release, by Hometrack, showed UK house prices dropping for a 5th straight month in February. The average price fell by 0.2% with annual prices increasing 1.4%, the lowest since April 2006. US Existing Home Sales Beat Expectations In the US, sales of existing homes showed an annual pace of 4.89 million units for January. Although the figure was better than even more pessimistic forecasts, it marked a 9 year-low. The report also showed that housing prices slipped for the 6th time in 7 months. GBP/USD - Cable Gains Slightly, Though Mainly Trading Sideways
The Pound-Dollar pair declined initially overnight, but pared its losses and tested the resistance it had set on Friday. After last Thursday's surge, the pair has traded in a narrow range. It's a similar case for the Euro-Dollar pair. USD/JPY - Carry Trade Weakens Yen
The Yen weakened this session. Speculations that US bond insurer, Ambac Financial will avoid having its rating downgraded, helped boost investor confidence thereby spurring carry trade. GBP/JPY - Pound Climbs vs Yen
The Pound-Yen pair, a favorite of carry trade, climbed 200 pips from its session low, and was trading near 212.40 by 2 PM NY time. The pair broke last Thursday's high, finding resistance near 212.75. USD/CAD - Canadian Dollar Strengthens to Start Week
Record oil prices, which are hovering near $100 a barrel, along with speculation that Canada will be able to maintain its interest rate advantage against the US, both helped fuel strong gains by the Loonie today. The US Dollar-Canadian Dollar pair fell 130 pips in the Loonie's favor from its Sunday open, until 2 pm NY time. EUR/CAD - Strong Gains by Loonie
The Euro-Canadian Dollar pair saw an even bigger fall, declining about 230 pips. Today's drop reduces the pair's 2-week uptrend by half. The Loonie also saw strong moves against the Yen. NZD/USD - Kiwi Hits Record vs Greenback
The New Zealand Dollar-US dollar pair drifted slightly higher today, continuing a 4 session rally. The pair broke above the .81 level, which is the highest the Kiwi has reached against the greenback since the New Zealand currency was allowed to trade freely in 1985. The kiwi has been rising as its 8.25% interest rate makes it a favored destination for investors looking for carry trade opportunities. Upcoming Releases Tonight, Japan will reveal its Corporate Service Price Index, while the Bank of New Zealand will publish its quarterly inflation expectations. Overnight, we get GDP and a survey on business climate from Germany, the UBS Consumption index for Switzerland, and business investment figures from the UK. Tomorrow, the US unveils data on producer prices, housing prices, consumer confidence, and the Richmond fed manufacturing index. |
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