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06/03/2007 - Eurozone finance ministers meet next week

Posted by FOREX.com's Weekly Strategy in June 4th 2007  
* Eurozone finance ministers meet next week
* G8 meeting next week unlikely to mention currencies
* Central bank rate decisions from RBA, RBNZ, ECB and BOE
* US economic data show rebound alongside receding inflation

The currency market remains hemmed in, with the USD continuing to range against European currencies and probe higher against the JPY. The minor dollar pairs (AUD, CAD, NZD) saw the USD weaken, with gains in the CAD continuing relentlessly after the BOC signaled it might need to raise rates in July. My much hoped-for breakout from recent ranges failed to materialize yet again, but the more it goes on the larger the break out is likely to be. We had a lot of data out this week from the US and rather than providing the spark to light a new directional trend, it mainly served to reinforce the existing consolidation. US Treasury yields made new highs for the year, with the 10 year note yield set to close around 4.95%, up nearly 6 bps on Friday alone. Importantly, though, the interest rate differential between the USD and most other major currencies held steady, meaning interest rates are moving higher across the board. Gold reversed course on Friday, rallying over $10/oz and ended the downside correction that dominated most of May.   Full text »

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Filed under: Weekly Strategy