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.
