Forex Trading TV Video Blog

Yesterday the greenback was bearish against its rival currencies, continuing its decline from the beginning of the week. Throughout the trading day, the EUR\USD was being traded just under 1.5800, the GBP\USD reached 1.9730 and the USD\JPY declined to under 103.00. Following the previous day highlighted by the lower than forecasted PPI, yesterday the greenback was greatly affected by the announcement of -5.4M Crude Oil Inventories and hawkish comments from the FOMC meeting. Crude Oil has reached an all time high this week and its bullish surge continues to negatively affect the American economy.

As hawkish comments and notes from the FOMC meeting were released, traders became ever more wary of the USD. The main news coming from the FOMC meeting has been the intention of the Federal Reserve to resist any possible Interest Rate cuts in the near future, downgrading estimates for economic growth in 2008. As a result of the weaker USD and the negative American Inventories, Crude Oil reached a new all time record, trading above $134 per barrel.

Looking into the very important FOMC meeting held yesterday, traders should focus on the data that was released by Fed policymakers. In their projections, Fed officials predict the US economy to grow somewhere between 0.3% and 1.2% this year, much slower than the 1.3% to 2.8 % forecast made in January. Last October, the Fed expected US economic growth as high as 2.5% this year. The Fed now expects the US jobless rate to rise to 5.5% - 5.7% this year, higher than the 5.2% rate seen in January.

Looking ahead to today, the very important US Unemployment Claims will be released with forecasts predicting 373K claims, 2K higher than the previous month’s claims. Half an hour later, Fed Governor Kroszner will deliver a speech titled “Prospects for Recovery and Repair of Mortgage Markets”. Traders should look for further hints regarding the Fed’s future intentions. The main news event that will affect the USD’s momentum will be Unemployment Claims. As forecasts expect more claims than previously, traders should expect further bearish momentum from the greenback.

Yesterday, the greenback maintained its volatile trading momentum against its rivals, while mixed important economic figures were released from all over the world. The greenback rate hit a 10 day low against the EUR at the rate of 1.5542 before recovering most of its losses following positive economic releases from the U.S. markets.

Yesterday was an important news day on the US economic calendar. The release of some key economic indicators showed that some improvement or more importantly stability has returned to the US economy. The Unemployment Claims report showed a moderate increment, with the final figure of 371K. The Philadelphia Fed Manufacturing Index recovered to the level of -15.6, which is a great deal healthier than the April reading of -24.9. Overall, yesterday’s mixed fundamental data imposed a very volatile and risky session.

Today should provide some expected volatility in the market, ahead of a day full of U.S. news events highlighted by the housing market and consumer confidence data. Traders may expect another fall in Housing Starts and Building Permits in April. However, the University of Michigan Confidence index in May could rise to 65.0 from a record low of 62.6 in April.

For the time being EUR/USD seems trapped in a range between 153.50 and 155.75. As long as market participants are in doubt whether the U.S. economy will weather the storm without any further rate cuts, traders should not expect drastic moves on the currency cross rate.