Sep 25 2008
New Home Sales - On Tap
The U.S. economic rescue plan of Bernanke and Paulson, as well as the Existing Home Sales figure, has caused frenzy in the market recently. Yesterday, the greenback underwent a volatile trading session against most of its currency counterparts. Starting the early trading sessions off rather flat, the USD’s value suddenly dropped following the 14:00 GMT announcement of the Existing Home Sales indicator as it came out worse than forecasted. Correcting this move, however, was the jump in value directly after Paulson and Bernanke’s testimonies late yesterday afternoon. It finished the day around the 1.4670 level against the EUR, slightly stronger than it was the day before.
The trading day began with small downtrends and low volatility for the USD as investors realized that the U.S leadership is having second thoughts regarding the financial bailout plan. Yesterday, Federal Reserve Board Chairman Ben Bernanke testified to the Congressional Joint Economic Committee stating that global financial markets were under extraordinary stress and threatening an already weak U.S. economy. He also testified that lenders are still more likely to remain cautious about extending credits to households and businesses, and described a gloomy economic outlook for the near future. However, it seems that Bernanke’s decision to urge Congress to confirm the rescue plan was enough to trigger an uptrend for the USD later in the afternoon. This uptrend was strengthened by a continuation of the steady decline in Crude Oil prices, which fell to $105 a barrel after spiking to as high as $109 after the USD’s early-afternoon weakness.
As for today, a batch of data is expected from the U.S. economy. So long as no crucial decisions regarding the bailout plan are made, these figures are expected to set the tone for the USD’s pairs and crosses. Special attention should be given to the New Home Sales survey because if it delivers unfavorable figures later today, it will validate a problematic landscape in the U.S. housing sector, and the USD is likely to weaken as a result. Also today, the Core Durable Goods Orders and Unemployment Claims are scheduled which should also have an impact on the market.
My Forex Blog
