American focus: Trade Balance data supported USD [E]

USD strengthens today. Most part of the growth was in the beginning of 

American session after U.S. Trade Balance report. While analysts predicted 

deficit growth approximately to $64.6 bln. in May, data of Commerce 

Department  showed deficit increase just to $63.8 bln. against $63.4 bln. in 

April. Structural problems were main reason of USD drop in 2004. The 

dollar covered losses and strengthened against the euro almost on 13% in 2005. Interest rate hike at each FOMC meeting was a 

reason of USD demand. Base refinancing rate last time was lifted on June 29 

to current 5.25%. The dollar is under pressure this year on 

speculations on coming Fed pause and rates increase in EU. 

It may cut rate's differential. In this case more 

favorible market for foreign capital will be Eurozone, not the USA.   

It is necessary to note the yen drop. Japanese currency came under 

pressure on a background of weakening expectations on BoJ rates. 

Japan's Finance Minister Sadakazu Tanigaki 

said there's ``no need'' for the BOJ to rush in raising borrowing costs. The 

yen rose 2.9% against the dollar on expectations BoJ rate hike. Rates' decision will be on July 

14. 

U.S. stocks fall. Season of quarter reports didn't pleased the market. It can 

be the reason of fears concerning the slowdown of corporative 

earnings pace in Q2. Corporate news: EU regulators announced a $357 million 

fine against Microsoft for not sharing information with rivals to help 

them develop software that works with the Windows operating system. 

Monster Worldwide announced on Wednesday that it may need to restate 

results for 2005 and prior years because of problems with its past 

options-granting practices. Biotech firm Genentech reported a 79% increase profit 

in Q2, exceeded forecasts of analysts. But the earnings missed 

analysts' forecasts, and shares fell. The U.S. Army will continue its 

multi-billion dollar contract with Halliburton.