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DENVER,CO,USA - Galactic FX Update - 12/18/98
SUMMARY
While the future of President Clinton hangs in the balance, the House debate
on impeachment will offer little market-moving news today. The debate
opened in tenuous fashion as controversy surrounded the legislative
deliberation while U.S. troops are in harm's way in the Middle East. The
House vote should be done by late Friday. In case the House does vote to
impeach - several key "swing" votes appear to be shifting towards
impeachment - the second Senate trial in history will take place in the new
year. In the Persian Gulf, Pentagon officials have confirmed that
"substantial damage" has been inflicted on Iraq, as the U.S. prepares for a
third wave of attacks scheduled for today. The DJIA is flat, up 1 point and
the 30 year Treasury is off 8 ticks, yielding 5.03%. Gold is $290.70/ounce.
EUROPE
The ECB chief, Duisenberg, told the WSJ that he may decide to serve out his
full 8 year term. When first appointed in May, he announced that he would
possibly stand down after 4 years, to make room for the BoF's Trichet. In
Germany, November M3 growth was annualized at 5.3%, in line with
expectations. This slowdown halts the slight acceleration of the prior 2
months, and should provide additional reassurance in the minds of ECB
officials. In the U.K., medium-term inflation appears to be in check with
preliminary M4 lending sharply lower at 1.5 billion pounds.
ASIA/PACIFIC
The Nikkei gained 67 points led by a rumors in a German magazine that Nissan
may be merging with Daimler-Chrysler. Japanese bonds rose as worries that
the bombing of Iraq would adversely impact financial markets receded. In
Hong Kong, Moody's cut financial strength ratings of several major banks,
citing Hong Kong's vulnerability to external shocks and less liquid position
of Bank of East Asia. In Malaysia, an important development has taken
place regarding the capital constraints put in place last September. A
British money manager confirmed that an arrangement was being made to
repatriate a substantial amount of GBP. This may be the opening that the
markets have been waiting for in regard to for a more free exchange of
capital in/out of Malaysia.
AMERICAS
In Mexico, the MXN appears to waiting for direction from the U.S. House
impeachment debate. CAD is also waiting to take some direction from the
proceedings, but got some support on the back of inflation data that
supported the tepid price movements north of the border.
Respectfully,
Richard Chehovin
President Chief Currency Trader
Galactic FX International, Inc.
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