Aug 29 2007
Uncertainty engulfs the greenback’s fate.
Monday’s releases from the US markets, which showed that US Existing Home Sales went down by 0.2% in July, caused the greenback to be traded at a mixed trend against most of the major currencies. The weak housing figures is raising many doubts and concerns about the health of the world’s largest economy, this lower home values left Americans feeling less wealthy. Investors are waiting for the speech on “Housing and Monetary Policy” by Fed Chairman Ben Bernanke later this Friday, which will probably offer few hints about the future directions of the Fed’s monetary policy. As it seems at the moment, the housing market correction could take longer than expected and that could weigh on expenditure going forward.
It should be noted that the sub-prime market is just 4% of the overall real estate market, and its escalating effect is sometimes overwhelming. This ongoing housing problem makes it very difficult for Americans to tap home equity to finance the spending. A slowdown in hiring and slimmer pay raises might weaken consumer sentiment and purchasing power as overall economy growth slowdown. Sales of second hand houses fell in July for the fifth month in a row, as the figure came in the lowest in almost five years, while the surplus of those homes rose to a 16-year high. The labor market shows signs of weakening. Unemployment rose in July to 4.6 percent from 4.5 percent, which is almost the lowest in six years. And job growth slowed to 92,000 last month from 126,000, down from last year’s average of 189,000 a month. Thos are quit concerning figures with which the US economy must deal at the short run.
As for today, there is no major news releases expected to come from the US today, and the greenback’s movement is floating in a cloud uncertainty. The following two days are packed with major events and should probably shed more light on the Greenback’s future behavior.
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