Jun 23 2008
Interesting Trading Week Ahead After The Oil Summit in S.A
The USD saw a significant swing in momentum last week as it saw losses versus most of its currency rivals. The dollar was affected in large part due to the rekindling of economic worries in the US that has put the potential Federal Reserve (Fed) rate hike in jeopardy. Fed Chairman Ben Bernanke and his constituents have been adamant lately about the intention of raising rates if inflationary behavior continued. The oft traded EUR/USD pair saw its biggest weekly jump in over 3 months, after the US currency previously spent weeks recovering versus the very same EUR.
Last week’s US fundamental data was stable as the key calendar events came back either even or positive. Most of what drove greenback bullishness over the last few weeks were inflationary scares that pushed talk of a Fed rate hike. However, as the week progressed rising Oil concerns and big losses from mutual funds in the US sparked the bearish reversal in the USD which led to its trading week closing of 1.5626 vs. the EUR.
One of the major news events which look to set the tone for this week’s Forex market was the Jeddah Oil Summit, held on Sunday in Saudi Arabia. The summit was put together by Saudi Arabia to discuss Oil prices with major oil producers, oil companies, heads of state, and oil ministers. The summit produced an expected range of conclusions as Oil producing countries pledged that the amount of oil being produced was enough to supply world demand; whereas western leaders challenged the capability of Oil nations to keep up with the growth in demand throughout the world. The Saudi’s committed to raising production to 9.7 million barrels a day coming ever so close to a 28 year high.
On tap for the rest of the week in the US, we should expect a relatively light load of news highlighted by the all important Interest Rate decision on Wednesday. Also on Wednesday the USD will see Core Durable Goods Orders m/m, New Home Sales Crude Oil Inventories and a FOMC Statement. Expect the dollar to trade within its current ranges until then. Today the US is absent from the news calendar and will likely move according to the response by traders to the Jeddah Summit.
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