Aug 06 2008
Crude Oil Inventories On Tap
The dollar strengthened against all of the majors as it traded at a 7 week high during yesterday’s trading session and continues its romp this morning. The USD gained over 100 points against the Euro to close below 1.55. More importantly for the dollar was the direct relationship between US fundamental data and the bullish momentum. Another day of ‘positive’ US news strengthened investor confidence in the Greenback and could continue to be the catalyst for more appreciation. The ISM Non-Manufacturing Composite index came in at 49.5, higher than expectations and 1.3 points higher then previously published. While the manufacturing index is on the rise it has yet to eclipse a mark of 50, which would indicate expansion in the sector. Still though, such a significant numerical rise was enough to spark market confidence in the rising dollar and hint that nationwide economic expansion in 2008 is still feasible. Also released yesterday was the Federal Fund Rate which stayed put as projected at 2.00%. While this had little effect on the market, the accompanying statement from the Federal Open Market Committee sparked more bullishness in the dollar. The FOMC Statement stated in part that the Federal Reserve’s estimation of inflation will continue to depreciate into next year, hopefully giving some closure to market woes in the US. With the new findings being added to the current stock market rally in America, currently at its highest mark since April, and the shocking drop in Crude Oil prices, the USD looks to have once again escaped some disastrous circumstances.
On tap for today only one indicator will be released from the US event calendar. Crude Oil Inventories are expected to rise from -0.1M to 0.1M. The inventories indicator has grown in significance in recent months, as the fluctuations in Oil prices have become one of the most important market movers. Forex traders are advised to follow crude oil prices and equity market movements before placing their transactions.
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