Forex Trading TV Video Blog

Yesterday, the greenback continued to weaken after another round of disappointing data.
Durable Goods orders fell for a second consecutive month by -1.7% in September, much lower than the expectation of 1.5% which indicates that the credit crisis is refusing to vanish.
Last month’s contraction in Durable Goods was also revised from -4.9% to -5.3%. Jobless claims dropped mildly but came in much worse than expected at 331k. New home sales recovered to 0.77M in September but it was still below expectation of 0.78m and is mainly due to a large downward revision in August. The greenback is sent to new 33 year low against Canadian dollar, and is pressing 23 year low against the Australian Dollar and flirting again with record low against EUR. Crude oil also surged to another record high, jumping by US$3.50 to US$91.09.
Looking ahead, the University of Michigan’s Consumer Sentiment survey will cap this week’s data from the U.S however, the market is showing very strong signals of negative USD pressure, and it appears that the greenback will probably end this week in another fresh all time high.

The EUR slightly appreciated overnight as poor U.S. economic data did little to ease speculation of a possible future rate cuts by the Fed.
In data from the Euro-zone, the German IFO index came relatively flat on consensus. Overall the EURUSD traded with a low of 1.4249 and a high of 1.4344 before closing the day.
The Euro-zone economic data is showing us that in spite of the greenback’s weakness which made the US products more attractive and cheaper, the Euro-zone exporters didn’t hurt significantly, however this is more likely to occur if the EUR strengthening will maintain its pace, and then it may threat the Euro-zone economy in a more radical way.
The European calendar is quite empty today except for the M3 Money supply Y/Y which is expected to be released at 11.5 which is very close to the previous release of 11.6, and will probably not generate any price movement.
It appears that the EUR is going to continue to climb up at least for today, as there appears to be no light in the end of the Greenback’s tunnel, at least not for the short run.

The USD fell to a record low vs. the EUR and was the weakest in 5 weeks against the JPY after the G7 failed to address the currency’s record decline at a meeting of finance officials on Friday. The EUR/USD flew to 1.4347, only to consolidate around 1.4310 later on.

Last week’s record lows of the USD were also triggered by a set of dismal statistics, raising expectations that the Federal Reserve would cut interest rates at the end of the month, further weakening the USD. The dollar’s drop could also extend during this week as the key economic data is likely to show further weakness in the U.S. housing market, deepening the expectations for the future interest rate cut by the Fed.

Today there is no significant economic news expected from the U.S markets apart from Fed Governor Kroszner’s and Chicago Fed President Evans’s speeches that may provide more clues regarding future monetary policy. New Home Sales due to be released later this week, with expectations currently standing at 770K, the lowest since May 1997. Existing home sales for September are set for release on Wednesday, with economists expecting an annualized rate of 5.25 million, 0.25 million less then in the previous month.

It is difficult to see where the dollar strength will come from, until the expectations of further Fed rate cuts will not be erased. As for today the greenback is expected to float low post the negative releases of last weeks end and growing concerns about inflation.