Aug
14
2008
The USD completed yesterday’s trading session with mixed results versus its major rival currencies. During the first half of the day, the U.S. dollar eased versus the euro and the yen after government reports showed that Retail Sales fell 0.1% in July, below the 0.5% expected by analysts. The greenback retreated from earlier gains after concerns over gasoline supply following a U.S. inventory report showed that crude stockpiles and refined product supplies fell last week, declining to its lowest levels since last 10 years.
Following this report, the Crude Oil prices rocketed more than $4 per barrel hurting the USD against the EUR and increasing worries about the main economy’s growth outlook. However, the USD rebounded in the late trade session and the recovery erased earlier losses and the USD edged lower against the Euro and rose against the Yen. Also yesterday, Import Prices from the U.S. rose 1.00% more than expected, reaching 1.7%. This increase was preceded by sharp gains in energy and food prices leading prices for imported goods to their fastest annual gain on record.
Today will be another big news day for the greenback. The Core CPI is forecasted to decrease by 0.1% from 0.3% in the last month and the CPI is expected to be reduced to 0.4%, which shows that inflation is easing on the U.S. economy. The Unemployment Claims report, one of the most influential USD indicators, is forecasted by analysts to show a decrease of 15k jobless individuals, from 455K last week. Also today, the President of the FED Bank of Minneapolis will deliver a speech about Repercussions from the Financial Shock where we will find out if the FED will maintain its hawkish inflationary rhetoric. Traders should follow the Unemployment Claims report and CPI results which will determinate USD trends.
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Forex Blog
May
14
2008
The USD strengthened throughout yesterday’s trading and as a result of mostly positive economic releases; it saw a day long bullish trend. Although the USD did lose momentum on Monday, yesterday it gained strength against most of its rivals. Against the EUR, the greenback rose and led to a decline of the pair to a level of 1.5480 in late New York market trading. The main factor that led to the USD’s rise was the better than expected Core Retail Sales figure.
Yesterday’s batch of American economic announcements started with Fed Chairman Bernanke’s speech. Bernanke said that the financial markets improved, but cautioned that the central bankers and the markets are still a long way from the point when they can say the credit crisis is near its end. Traders looking for hints about future Interest Rate cuts in his speech were disappointed as he did not discuss the Fed’s next Interest Rate move. Right after his speech, a batch of economic data was released, highlighted by Core Retail Sales of 0.5% and Import Price Index of 1.8%, both higher than forecasted.
Further adding to the USD’s bullish momentum was the lower than expected Business Inventories figure which is a good sign for the American economy. Retailers order more goods when they have depleted inventories. This creates more business for the wholesales, who in turn increase their orders to manufacturers.
Looking ahead to today, we have the Consumer Price Index due to be announced. Forecasts have the index at the same rate as last month which should not affect the USD’s value very much. Following the CPI announcement, Fed Governor Kroszner speaks at the Federal Reserve Bank of Boston. Lastly, traders will wait to hear the Crude Oil Inventories and watch how that release will affect the very high Crude Oil price, which high a record of nearly $127 yesterday. Traders should not expect much volatility from the USD today as the news releases are expected to be steady, but any surprise will either keep up the bullish momentum or lead to negative momentum.
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Forex Blog
