This article is brought to you by:
CONSENSUS
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
800-634-3194(March 26, 2002) CURRENCIES: U.S. consumer confidence numbers jumped to 110.2 for March, versus 95 in February. This was the largest jump in 25 years and brought a wave of buying into the greenback. Fed President William McDonough countered that with a comment that the U.S. Dollar may be "a little overvalued." His comments were a surprise to the market which quickly chiseled off the dollar gains. He also commented that it is unlikely that there will be "significant changes in exchange rates." Well, that's fairly safe, considering that currencies have mostly stayed within a range for months now. Still, for our purposes, finding the trend within that range is plenty satisfactory.
The yen saw a bounce against the dollar, mostly profit taking in advance of the three day weekend.
The German IFO index rose to 91.8 for March versus 88.5 in February, its best performance in 11 months. This suggested more confidence for the Euro zone, but also raised the specter of a rate hike if inflation begins to become a problem.
Japan's fiscal year ends on March 31, and already FOREX traders suspect they are seeing the end of capital flows into the yen. Since the Japanese have failed to act in terms of their poor performing loans and they are seen as still entrenched in a recession, traders see the yen as likely to head lower.
The pound was the recipient of good buying due to talk of a planned takeover of Innogy, a British energy firm, by the German firm RWE. The chart is suggestive of a short-term low, but the pound has been very choppy, calling this into question.
M. Steven Morgan www.commodityreview.com
Hosted by:
CONSENSUS, INC. AND INVESTORS
CO-OP
P.O. Box 520526
Independence, MO 64052-0526
816-373-3700
Fax: 816-373-3701
editor@consensus-inc.com