Forex Blog

The EUR/USD currency pair post some small drop today on Forex as the fundamental situation in U.S. economy looked better in April for the manufacturing sector. All of the reports that were released today in U.S. showed a positive dynamics for the dollar, helping it to go up against euro, pound and yen. EUR/USD is currently trading at 1.5784.

Producer Price Index in March grew at an unexpected pace — 1.1% compared to 0.3% in February and 0.6% consensus forecast for March.

NY Empire State Index report showed a sharp improvement in the manufacturing sector survey. The index went up from -22.2 to 0.6. It was expected to go up to -17.0 today.

Net foreign purchases of the long-term U.S. securities in February 2008 were also significantly higher than both expected and the previous month values — $72.5 billion. In January they were $57.1 billion (revised down from $62.0 billion) and in this month they were expected to fall to $60.0 billion.

Dollar failed to sustain the growth that it has been showing recently and today it fell down against euro to 1.5662 from the opening at 1.5621. Although it tried to rally again earlier today, traders didn’t felt that positive about the U.S. currency.

Factory orders in February disappointed the market participants — they fell 1.3%, while the consensus forecast was at -0.8%. Still this decline was better than the January’s 2.3% fall (revised down from 2.5%).

Crude oil inventories grew significantly in U.S. last week — they increased 7.3 million barrels and are in the upper half of the average range for this time of year now. This news may force oil prices to go down below $100/barrel level in a short-term perspective.

CPI release for January along with some moderate data on housing lifted traders’ expectations and spurred some good growth of the U.S. dollar with both EUR/USD and GBP/USD losing about a half percent for the day. It may be a good sign for the dollar bulls eventually as it is almost definite now that the recession is either ending or is not going to happen at all.

January CPI grew at the same pace as in December — 0.4% up above the expected by the markets 0.3% growth.

Housing starts during the same month increased from 1,004k to 1,012k, but were slightly below the expected 1,015k level, while building permits decreased from 1,080k to 1,048k and were slightly above the expectations (1,040k).

Dollar was almost unchanged versus euro today before some important to fundamental analysis indicators were released in U.S. EUR/USD opened at 1.4580 and made some moderate movements in both directions, but has been near the opening level before the statistics came out. Good data had an improving effect on dollar. It is now trading more than 30 pips below the opening price.

Advance figures for the retails sales in January were released today. They grew up by 0.3% instead of dropping the same value down, as the majority of the economists expected.

Business inventories in December were up 0.6% - a good result, considering 0.5% forecast and 0.4% growth in previous month.

U.S. crude oil inventories last week rose 1.1 million barrels, now they are in the middle of the average range for this time of the year. This is another consequential gain in oil inventories, which may curb oil prices again.

The dollar showed a mild growth against the euro today even after the trade balance report showed the widening of the deficit. Against the Great Britain pound the U.S. dollar also went up, with GBP/USD hitting the lowest value since march - 1.9481, but lost the most of the gain after the trade balance release.

The U.S. international trade balance deficit increased in November from $57.8 billion to $63.1 billion as the imports grew ten times faster than exports. Both average export and import prices rose by 0.3% - slowly than in October.

Treasury budget numbers for December were also reported today showing the surplus of more than $48.2 billion - a higher surplus than in December 2006 (almost $42.0 billion), but still lower than the expected $52.0 surplus for December 2007.

EUR/USD continued to rally today after four unprecedented days of growth, making it the full bullish week for this currency pair with the every trading day session ending in favor of euro. Even holidays with their low financial trading volume couldn’t save USD from losing 2% against EUR.

Chicago PMI (Chicago Business Barometer) rose to astonishing 56.6 in December after being only 52.9 in November. The average forecast for this indicator was around 52.0. So, it should definitely improve current dollar’s stance.

U.S. Department of Housing and Urban Development released the report on November new home sales, showing a large downward gap between the October and current values - 9%. New residential sales were at 647,000, while October’s value (revised down from 728,000) was 711,000. Analysts expected a lesser drop to 715,000.

U.S. dollar gained against other currencies today, showing a significant change in GBP/USD, along with a little less strong appreciation in EUR/USD. As no important positive data was released for USD, this growth may be accounted to the inertial buying of dollar and position closing on the previous good news and the loss of interest to carry trade.

Final numbers for GDP growth and GDP deflator in Q3 2007 were released today, but they didn’t change anything at all as they were known long before today. GDP growth remained the same - at 4.9%, a very high number for U.S. economy, GDP deflator was revised from 0.9% to 1.0% - an insignificant change.

Weekly report from the U.S. Department of Labor showed that initial jobless claims reached 346k - above the expected 335k and 12k above the previous 334k amount.

Leading indicators continued their decline in November - they fell by 0.4% - a slightly better then 0.5% dropdown in October, but worse than -0.3% that was expected by market analysts. On the bright side, leading indicators is not an important market parameter for Forex.

Philadelphia Fed November index disappointed dollar bulls with a -5.7 value, whereas October value was at 8.2 and a slight drop to 6.0 was expected by the market participants.

Dollar remains almost unchanged against euro even after the release of the U.S. housing data. EUR/USD grew up by about 16 pips only for the whole day with the main movement direction changing constantly. Supported by the yesterday data on the net foreign purchases, dollar doesn’t want to give up positions even after the not so good data in the real estate sector.

U.S. Census Bureau released the New Residential Construction report for November. The new building permits in November was at 1,152k annualized. That’s compared to 1,170k in October and to 1,150k expected for this month. New housing starts annualized rate in November was at 1.187k - well below 1.232k in October, but slightly above the expected 1.175k.