Jul 30 2007
The Greenback is strengthening despite crashing US stock market.
The Greenback is strengthening despite crashing US stock market.
There have been several important releases last week, especially from the struggling housing sector, that demonstrated once again the housing crisis is nowhere near over. Existing Home Sales came out weak at 5.75M, and New Home Sales disappointed at 834K. To add some fuel to the negative news fire, Core Durable Goods entered a negative territory of -0.5%. The flow of weak news from the US continued on Friday as the GDP Annualized came in at a lower than expected 2.7% and a consensus of 3.4%.
It is quite interesting to see that on top of everything else, the US stock market is weakening, as the Dow Johns dropped another 400 points, yet on the other hand, we clearly see a USD recuperation, that is slowly shaping into a rally. The Greenback is gaining strength against most majors, as the EUR/USD is now traded at 1.3640, and the GBP/USD is traded at 2.0240 after peaking at an unbelievable level of 2.0600. The main reason for that is that traders are putting their trust on the Greenback once again, as external investment is increasing, and traders are hedging risky funds with US Currency.
This week will be quite full of important news releases, as apart of the Nonfarm Payrolls release on Friday, we also expect Core PCE, the Chicago PMI, the ISM Manufacturing, and Non Manufacturing Index. It looks as if price movement will be quite high, and there is a high probability of an additional positive move for the Greenback.
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