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Euro Pulls Back as Trichet Has No Bias, Dollar Rebounds


Euro is sold off against the dollar, which in turn boosted the dollar for a rebound, after ECB Trichet said that the current monetary stance after today's rate hike is enough to achieve ECB's objective of price stability and he has no bias now. The markets take that as a signal that today's 25bps hike to 4.25%, is really a one off event and Euro was sold off on profit taking after rumor became news.

On the other hand, dollar was supported after Non-farm payroll report in Jun was close to consensus. Job markets gave up -62k jobs in Jun, close to expectation of -60k. Unemployment rate was unchanged at 5.5%. Jobless claims rose again to 404k. At least, the report isn't much worse than expected.

While dollar did recovers impressively today, the overall short term bearish outlook doesn't change. Traders are still continuing to pare bets on near term rate hike from Fed in near future. Also, dollar will continue to be pressured by surging oil prices, which made another record high above $145 a barrel today. Technically speaking, there is no confirmed signal in major pairs yet.

Next focus will be ISM non-manufacturing index which is expected to remain mildly expansionary at 51 in Jun.

Earlier today, Pound was sent lower against dollar and Euro after UK Services PMI hit lowest level in seven year at 47.1 in JUn. Services PMI in Eurozone dipped to contraction region of 49.1 too. Retail sales, though, unexpectedly rebound from at 1.2% mom, with yoy rate back to positive at 0.2%. Swiss CPI was unchanged at 2.9% yoy in Jun. Australian trade balance turned deficit at -956M in May.

Source - ActionForex


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