11 July 2005, 15:33  Cable, bottoming?

Cable found at least a soft bottom today, as it rallied more than 80 points, back over $1.7400 to trade at a session high of $1.7464 at 9:00GMT. Part of the rally was due to a strong performance in U.K. equities although Sterling's rebound was caused by technical factors as many shorts covered their positions. OPDM Housing Prices for June came in at 6.0%, beating expectations of 5.7%, but falling short of May's figure of 6.9%. The PPI data showed signs of concern, as double digit gains in prices of inputs, but a continuing decrease of -0.2% in output suggested that while costs of production are increasing, dampened demand. Trade balance figures were mixed, as the Visible Trade Balance number beat expectations, but worsened from last quarter's mark to -4962M Pounds. Positive news from across the Atlantic helped drive the rally, while news of Dennis' passing and the subsequent subsiding of oil to $59 a barrel helped out many manufacturers. Despite the possibility of being affected by the terror attacks, the travel & tourism industry greatly benefited, as British Airways shares rose one percent. Yields in the benchmark treasury rose 2bp to 4.23% after prices for raw materials increased in June. Speculation that increasing input prices will translate into inflationary conditions is keeping Gilt yields on the edge.

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