Jul 11 2008
US Trade Balance On Tap
Yesterday, The Greenback experienced mixed results versus a basket of its currency rivals. Despite a notable fall in initial jobless claims, which descended to 346k in the week ending in July 5, from 404k the previous week. Thursday, the U.S. dollar fell to a one-week low versus the euro and slipped against the yen as well during morning trading in New York.
In the beginning of the trading session, the favorable data of the U.S jobless claims helped the USD sustain gains. The Dollar vs. EUR descended to 1.5699 from 1.5710 and against the Yen, it climbed to 107.41 from a previously 107.25. However, most of the gains were erased when resurgence credit worries appeared again after the two largest U.S. mortgage funders’ shares, Fannie Mae and Freddie Mac tumbled on capital concerns. Also, Fed’s Bernanke in a speech at Congress asked to consider more regulatory authority over the markets. In his statement, Bernanke requested passing legislation that will extend the regulators’ authority to oversee investment bank holding companies to follow and supervise the financial markets. Moreover, this is the second time he has mentions this type of action should be taken on this issue this week, his insistent view could be interpreted as an urgent demand for change.
On tap today, all eyes will be on the Trade Balance which will be announced at 12:30 GMT. Economists predict a deficit of 62.5B with a decrease of 1.6B from June’s deficit of 60.9B. Also today, we have the Import Price Index that measures the change in inflation for imported goods; it is expected to come in 2.0%. Another important release is the Preliminary Michigan Sentiment, which has been declining over the last two months and is expected to slightly fall again this month to 55.5. Traders should take advantage of today’s announcements as it seems like the USD will derive its trends based upon the actual value of the Trade Balance.
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