May 09 2008
US Trade Balace on Tap
Yesterday, the greenback lost its newly acquired bullish momentum and returned to the 1.54 range against the EUR. Unemployment claims in the U.S. this month beat out the forecast of 370K and were measured at 365K, 18K less than March. The USD was on a bearish momentum against most of its currency rivals throughout the trading day, and while it would seem like the positive Unemployment Claims would raise the USD’s value, the USD dropped even further after the figure was announced. Monthly Wholesale Inventories also beat our forecasts and a -0.1% change was announced. The negative change actually is a good sign for the American economy because it shows that wholesalers order more goods from manufacturers when they have depleted inventories. Despite the economic news that seemed encouraging for the greenback, the USD lost ground to most of its rivals, specifically the EUR following European Central Bank President, Jean-Claude Trichet’s hawkish speech at the ECB Governing Council meeting. As the European Central Bank disappointed markets by providing no hints that it might ease interest rates any time soon in the single currency zone, the USD lost all the value it gained on Wednesday against the EUR.
Looking at the big picture, it seems that the surprising fall in Wholesale Inventories and the dropping amount of unemployed Americans are good signs for the USD’s future. As the US moves further away from the credit crisis, it seems like the American economy is rebounding quite well. While there has been a lot of helpful economic data recently the U.S. economy isn’t catching a break with oil prices placing a huge tax on the US economy. The American economy will have to face the rising Crude Oil price as the “Black Gold” is trading at its all-time high.
Today, all eyes will be on the Trade Balance which will be announced at 12:30 GMT. Economists predict the value to be -61.4B which is a 0.9B improvement and it seems like the USD will see its trend’s direction based on the Trade Balance’s value.
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