Forex Blog

EUR/USD declined today to its new minimum level since June 13 after a bearish commentaries by Jean-Claude Trichet that followed ECB’s rate decision. Even bad reports on U.S. employment and housing couldn’t save the currency pair from falling. It is now trading near 1.5326 level.

Initial jobless claims rose to 455,000 last week, up from 448,000 a week before. Analysts estimated a decline to 420,000 claims for the last week.

Pending home sales rose by 5.3% in United States in June. This growth followed 4.9% decline in May. Median forecast for the June was at 1% decline.

Consumer credit rose by $14.3 billion in June. That’s above the recorded $8 billion May growth and exceeds $6.4 billion analytics’ estimate for June.

Dollar (and, actually, Japanese yen too) showed a major triumph on Forex market today after the Bank of England decided to go down from 5.50% to 5.25% on the main interest rate. And despite, while BoE lowered the rate, ECB held the rate at the same 4.00% value, dollar bulls pushed EUR/USD down as well as the GBP/USD currency pair. And that’s on the disappointing fundamental data coming out in U.S.

U.S. initial jobless claims improved from the previous report at a little worse pace than market strategists expected — it fell from 378,000 (revised up from 375,000) to 356,000. That’s still a very high number for this indicator and it’s a clear sign of the current elevated recession risks.

Consumer credit in the United States in December grew by $2.4 billion — a very low number compared to the November’s $15.4 billion increase. Even pessimistic expectations of $8.0 million growth were above the released value.

After the Federal Open Market Committee released its statement yesterday EUR/USD remained on its positions until today’s early European session, which brought Euro to a rally behind the crucial 1.3800 mark. Will EUR/USD stay above it? Probably. Will EUR/USD break the 1.3850 resistance barrier to soar high to 1.4000 level? Less probably. Let’s look on the fundamentals.
Yesterday a labor productivity data for the industrial sector came out lower than expected by the majority of traders - 1.8% increase, instead of 2.1%. Meanwhile, consumer credit for June this year increased by 13.2 billion dollars, while analysts were expecting 6 billion dollars increase.
FOMC released another ‘inflation-concerned’ statement, leaving the interest rates at 5.25% level. While the main concern for the FOMC remains the inflation, it started to get nervous because of the risks connected with the economical growth and especially housing crisis.
Today data on business wholesale inventories came out slightly better than predicted - increased by 0.5% instead of 0.4%, while the crude oil inventories again dropped down significantly - by 4.1 million barrels.
Despite of FOMC being more inflation orientated, the economical growth correction will probably make them to decrease the interest rates at least once (or at least stop increasing it even more). Currently, housing data and oil inventories (taking in mind current oil prices) don’t look very promising for the U.S.