USD Stabilizes against Major Currencies
Posted on 24. Nov, 2008 by admin in USD Analysis, USD Economic Analysis, USD News
The past week has proven that the greenback is consolidating at its current levels against the major currencies. However, the USD is constantly attempting to break through these current levels and it appears that a bullish breach seems far more likely than a bearish one.
Last week was filled with negative data from the U.S economy. The Producer Price Index (PPI) dropped for a third month in a row, landing on -2.8%, proving that consumers in the U.S are in a slump. The Building Permits survey dropped to a mere 0.71 million new permits that were issued in October, dropping for the fifth consecutive month. The housing sector in the U.S is one of the best gauges of the deteriorating economic condition as fewer banks are willing to provide a new mortgage which means fewer citizens are purchasing new homes. Last but not least was the Unemployment Claims figure, which reached 542K individuals who filed for unemployment insurance for the first time during the past week.
However, despite the unfortunate figures, the USD is refusing to slide. As stated here many times before, investors are currently seeing the negative data from the U.S as a pitfall for the leading economies, which will suffer greater from the ongoing decrease in U.S spending.
As for the week ahead, a batch of data is expected from the U.S economy. Traders should keep a close eye on four different indicators. First is the Existing Home Sales, which will be published today and will provide additional information on the U.S housing sector. On Tuesday, consumer related data such as the Preliminary Gross Domestic Product (GDP) and Consumer Confidence report are scheduled and will likely provide a better landscape of the consumers’ conditions in the U.S. Lastly, on Wednesday, the Unemployment Claims figure will be announced.
Forex traders should bear in mind that the last few weeks have shown that the U.S Dollar seems to be strengthening as a result of negative U.S data and not the other way around, which results in a type of pricing bubble. At some point the USD will meet an end to its recent bullish run.
