Forex Trading TV Video Blog

The US Dollar experienced a bearish session trading last week, due largely to rising oil prices and the hesitancy of the Federal Reserve to hike interest rates to battle inflationary scares in the US. Investors came into last week with the assumption that the US would beat the Euro-Zone to the punch and hike interest rates. This and some poor early data from the EU sent the dollar up against its major counterpart by more than 100 points. However the dollar was not able to maintain this trend and began to fall consistently throughout the rest of the week versus most of its major currency rivals. Poor US data did little to help the greenback cope with what ended up being a non-changing Fed Rate announcement. Additionally, the FOMC was about as vague as possible regarding how inflationary struggles in the US would be addressed. Following the decision by the FOMC to leave rates as is, Crude Oil prices shot up, rising nearly $10/barrel to close the week above $140/barrel. Dollar prices proceeded to make substantial drops versus the EUR and JPY. As the dollar slide continued towards the week’s end, Crude Oil prices hit an all time high, and the US stock markets took a big hit.

This week should prove to be even more important to the Dollar as we look forward to critical news, in what is already a shortened holiday week in America. On tap this week we can expect the ISM Manufacturing Index, ADP Nonfarm Employment Change, Factory Orders, Crude Oil Inventories, Average Hourly Earnings, Unemployment Claims, and the Unemployment Rate. These figures will be highlighted by the Thursday release of Non-Farm Payrolls and the ISM Manufacturing Composite. These events will likely provide much needed volatility in the market which has missing for quite some time now. We can expect to hear from several members of the Fed this week, as we have begun to see a clear division of monetary policy within the US economy. With the next scheduled rate statement for the Dollar roughly one month away, the Dollar will have to move on response to outside news.

The US will uncharacteristically be absent from most the news cycle today. The Chicago PMI is the only scheduled event on tap and should have a minimal effect on the overall market direction. As such investors are advised to review the USD counterparts before placing their transactions.

The Greenback saw yesterday a bearish trend versus the major currencies. When the Fed failed to convince that it would lift the interest rate before the end of the Year and despite a revised GDP that showed a slight improvement in the economy, which provided data that the country may have avoided a recession.

When keeping the Federal Funds Rate at 2% during Wednesday’s meeting the Fed expressed their worries about inflation signaling a future increment rate will be only probably over the next months. However the GDP grow by 1% revealing that the first quarter results of a growing but delicate economy. The economy is still impacted by a housing recession, credit and financial crisis which affects people and businesses a like to resist spending and investment. Also yesterday the existing home sales showed an increase of the 2.0% in May reaching an annual rate of 4.99 millions units from the 4.89 million units in April. This happened thanks to a fall in prices resulting in more attractive buys. In other effecting news on the USD Crude Oil prices climbed 5 USD heading to an all time record of 140 USD. This high was reached after reports that Libya may reduce Oil production, because of an “oversupplied market”. In addition official comments by OPEC members that prices will reach the 170 USD this summer did not help to calm the market. Additionally the price of gold climbed over $20 during yesterday’s trading session.

Looking ahead today we have several economic indicators expected to be released from the US. Among them we await the monthly reading of the Core PCE Price Index with an estimated 0.2% price increase for all domestic personal consumption. The Personal Spending with a rate that is expected to rise by 0.7%. The Personal Income which should rise to 0.3%. The Revised Michigan Sentiment that is expected to come in at 56.8. Traders will need to consider whether Wednesday’s Fed concerns and yesterday’s gold and crude oil prices will define today’s trend or the good news from yesterday and today will determine the trend.