Last week was an extremely volatile trading session for the greenback. The Dollar first depreciated against most of the major currencies, however just before the week ended, the USD saw bullish trends at all fronts, driving it back to former levels vs. the majors.
One reason that could explain the vexed trading is the contradicting economic publications that took place this week. On one hand the housing sector and the employment condition aren’t giving even the slightest clue that the economy is stabilizing. The Building Permits indicator dropped to merely 0.52M new residential building permits issued during January, and the Housing Starts indicator showed that only 0.47M new residential buildings began construction during January. Just to help you understand the severity of these figures, during June 2008, 1.09M new permits were issued, and 1.07M new buildings began construction. In addition, the weekly Unemployment Claims reveled that once again, over 600K people have filed for unemployment insurance for the first time. However, on the other hand, it seems that the price of goods and services in the U.S. is stabilizing. The Producer Price Index gave a surprising positive result, reflected in 0.8% rise in prices during January, and the Consumer Price Index rose as well, by 0.3%. The fact that producers are willing charge more, and that consumers are willing to pay more is one of the best signals to detect that the economy is getting healthier. However, one good month does not prove anything, and next few months will tell if the Obama administration is succeeding in stopping the financial crisis.
Looking ahead to this week, the most crucial publication could be on Friday when the Preliminary Gross Domestic Product for December will be announced and is forecasted by analysts to deliver a rather disturbing figure; it is predicted to decline by 5.4%. Such a result could lead to an angry trading day, just before the week ends. Until then, the Housing Sector indicator and the weekly Unemployment Claims should play the leading role in this week’s fundamental publications. Make sure you’ll watch closely after each of them if you want to make the biggest profits possible from this week.
