Aug 27 2008
Durable Goods Might Push The USD Further Up
Yesterday the greenback saw rising trends against most of its major currency counterparts, including a 6 month record against the EUR, and a two year high against the GBP. However, equal concerns on downside risks to growth and upside risks to inflation are keeping dollar activity restrained in the aftermath of yesterday’s FOMC Minutes.
Two main reasons led to yesterday’s dollar positive session. First was the batch of poor economic data from the Euro-Zone, especially regarding the German economy, which promptly weakened the EUR, and thus strengthened the USD. Later on, two leading indicators were published from the U.S economy and boosted the Dollar further. The U.S Consumer Confidence Index rose well above the expectations to a 56.9 mark, continuing a series of positive results from the survey. On the other hand, the New Home Sales failed to reach expectations, yet it did show that the poor housing sector has managed to seem positive despite its bleak condition, as the sales of newly constructed U.S single-family homes in July increased from an almost 17-year low in June.
Yesterday’s trading session may definitely be considered a global crossroad in terms of financial developments. Whereas the U.S economy seems to be pulling itself out of its gloomy status, the rest of the world, and the Euro-Zone on top of it, looks to be falling into a deep recession that if proven to be correct, might lead to a long-lasting bullish trend for the USD. Of course, the U.S economy is still far from a total recovery, but things are looking better for the US economy as a whole.
As for today, on tap will be U.S Durable Goods Indices, which analysts forecasted to deliver weak results. If it goes as planned, the USD may suffer a minor pullback. However, in the case of better than expected figures, the USD will likely find itself aiming to establish new records. Another indicator that should be noticed is Crude Oil Inventories that could generate turmoil in Oil prices and as proven, tends to have a great impact on the market.
My Forex Blog
