May 12 2008
The USD Continues to Rally
The Greenback traded with mixed results last week as the turbulent relationship between the USD and the EUR grows even stronger. The oft traded pair saw record highs towards the end of the month of April. Since, the pair has faltered by just under 4%. The 1.6019 mark set on April 22nd saw it largest drop off in the middle of last week, when the pair dropped to the 1.52 support level. Forex traders looked prime to ride dollar bullishness, even as the progress halted going into Friday’s market closing.
The US dollar reacted mainly to investor interest, as the economic data from America was mixed last week. Forex traders have regained some much needed confidence in the USD even amidst ongoing US economic concerns. The futures market is posting bullish trends by traders for the first time since late 2005 in regards to the US dollar. To add to the current positivity surrounding the greenback, the Chicago Board of Trade is showing an 80% chance that the Federal Reserve will leave the 2% interest rate as is. While investors are enjoying being on the positive side of the dollar, they must still be wary of a shaky US economic picture.
This week from the US economic calendar, we will be seeing data, which will likely contribute to liquidity and volatility in the Forex market. Core Retail Sales, Core CPI
Empire State Business Conditions Index, Unemployment Claims, TIC Net Long-Term Transactions, Industrial Production, Philadelphia Fed Manufacturing Index Housing Starts and Consumer Sentiment highlight a heavy week from the Greenback’s home. If mediocre forecasts hold true, the dollar will have to fight hard to have a positive week, especially against its most traded currency rivals.
Today, the US is absent from the economic calendar. Expect the dollar to trade mostly off of investor speculation and in response to outside news events and Oil pricing. Forex traders are ready to continue to ride a bullish dollar; however the US economy will have to hold up, as investors cannot blatantly ignore important economic data.
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