Apr
23
2008
The U.S. economy is facing fresh difficulties that will probably further dampen the national currency. Yesterday, the greenback tumbled to fresh lows trading as low as 1.6022 vs. the EUR after the European Central Bank policy makers signaled they may raise Interest Rates due to inflation concerns.
The USD extended its drop against the EUR following the low printing of the US Existing Home Sales in March. Falling house prices and rising mortgage risks continue to slow the U.S. economic growth. As a result of shrinking sales, builders are forced to pare back construction and reduce prices.
A tumbling dollar also prompted investors to purchase commodities. U.S. Crude Oil rose yesterday to a record 119.90 a barrel in New York, gaining on a Nigerian supply disruption and a U.K. refinery strike threat. Crude from Nigeria, Africa’s biggest producer, is low in sulfur and is prized by U.S. refiners because of the proportion of high-value gasoline it yields. The falling dollar and higher global demand for raw materials have led to records this year for commodities including gold, corn, soybeans and rice.
Today, there is no significant news expected from the U.S. markets. Traders should closely watch the fundamental data from the Euro zone as it may determine the future USD direction. Today, we may expect another volatile trading session for the greenback. There is a possibility that the dollar will further weaken, finally stabilizing above the 1.60 mark against the EUR.
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Forex Blog
Apr
22
2008
Yesterday, the greenback lost ground on what had been a bullish closing to last week’s trading. The US was absent from the day’s economic calendar, which pushed the Dollar to record lows against the Euro in particular. The greenback has struggled to make a steady recovery against its major currency rivals, as bullish trends have proven to be short lived lately. With so many contributing factors to the fate of the dollar and the overall importance it has on the global economy, many investors still believe the greenback has the ability to recover, even with the current state of affairs.
Last week’s unemployment numbers were better than expected along with the Empire State Business Conditions Index, and events for the week to come could contribute to the greenback.
Yesterday, EUR/USD prices soared towards the 1.6000 level. A contributing factor in the rise of the major pair were stock market losses brought about by Bank of America reporting a sharp drop in their income. The bank, currently the second largest in the US reported quarterly losses that sent US stocks to their first losses in 5 days.
Today, we should expect a much more volatile market due to US news events on tap. At 14:00 GMT we expect the Richmond Fed Index, quarterly House Price Index and the Fed TAF auction summary, these will be headlined by the release of Existing Home Sales. The figure is forecasted to fall roughly 1.5% from last month’s number and will show that Existing Home Sales slipped to $4.90M. Last month’s number of $5.03M broke a six-month spell of declining sales, while annual figures from last year still trump this year’s figure by just under 25%. Barring a positive surprise in these results expect to see even more dollar bearishness that could push the EUR/USD to record highs beyond 1.60.
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Forex Blog
