Forex Blog

EUR/USD gained a little today, correcting from the previous daily drawdowns, after the jobless claims and existing home sales statistics was released today in the United States. Dollar was standing at a strong upward position on the Forex market for the last today, but today it reacted sharply on the fundamental data and after a high intraday volatility lost somewhat to euro.

Initial jobless claims soared from 372k to 406k last week after consensus forecast of 380k; the previous week claims were also revised up from 366k.

Existing home sales declined in June. They fell 2.6% from 4.99 million to 4.86 million (annual seasonally adjusted rate). The average forecast was a fall to only 4.95 million.

EUR/USD didn’t change from its upward trend today after the final Q1 GDP data was released. The currency pair continued to grow for a third day in a row and advanced today from 1.5664 to 1.5737 after the most important fundamental reports for today were released in U.S.

GDP in the first quarter of 2008 advanced at an annual rate of 1.0 percent — higher than 0.9 percent growth reported in the preliminary report and it has met the analysts’ expectations.

Initial jobless claims didn’t change last week — they remained at the revised value of 384k (revised up from 381k). They were expected to fall to 375k last week.

Existing home sales rose unexpectedly in May — to 4.99 million (annual rate) from April’s 4.89 million. They were expected to rise to 4.95 million.

Today EUR/USD again showed a good level of gains, recovering from the major drop that was seen on Monday. It’s already up by almost 0.8% and is looking strong. The reason for this behavior lies in the good Eurozone fundamental data and average data from U.S. today.

Initial jobless claims report for the last week showed an insignificant drop by 1,000 compared to previous 302,000 (which has been revised up from 301,000). The analysts expected a growth to 320,000 that week.

The report by National Association of Realtors on Existing home sales in December showed a bigger than expected decline — to 4.89 million from 5,00 million in November (annually adjusted).

Crude oil inventories in U.S. continued to grow in the past week, rising up 2.3 million barrels, compared to previous value. This growth can mean a domestic demand decline and the wish to increase the inventories while the oil prices are quite low.

EUR/USD seemed almost completely independent of the important fundamental indicators which were signaling the worsening economical situation in USA. EUR/USD was falling by more than 100 pips during the day, but then it returned to a more moderate loss - 50 pips.

Manufacturers’ durable goods orders in October 2007 decreased by $0.9 billion which is 0.4% the previous month value. The consensus forecast for this value was at 0%, meaning that the orders shouldn’t been changing at all.

National Association of Realtors announced its October existing home sales number - 4.97 million annualized, well below both 5.03 million in September and 5.00 expected for October.

Crude oil inventories reported by the U.S. Department of Energy from November 16 to November 23 declined by 0.4 million barrels, showing another week without an increase, which is so needed after some major inventories downfall several weeks ago.

This day was very volatile on Forex EUR/USD pair, but it was without a distinct leader among those two. With dollar falling and rising during the day it ended almost at the same point it started. But trend for the rest of the week could have been probably founded today by two important fundamental reports on U.S. economics.

First, the crude oil inventories for the last week fell by whopping 5.29 million barrels. Department of Energy even changed the phrase in its report from “well above the upper end of the average range for this time of year” to “near the upper end of the average range”. With low oil inventories, the price for this vital commodity can continue its fast growth seen during the last days. And expensive oil will almost certainly mean cheap dollar.

Second, existing home sales for September showed decreased by almost 0.46 millions to 5.04M (total annual rate). That is more than 19% lower than the September 2006 figure and also significantly lower than National Association of Realtors expected for this September. Weak real estate reports adds another reason for FOMC to lower interest rates next meeting (31st of October). And that can’t be good for dollar too.

With the consumer confidence surveyed in this September fall beneath the level of 1985 (from 105.6 to 99.8) the U.S. dollar can’t hold its position and loses almost 100 pips on EUR/USD rallying it to a new historical maximum at 1.4154.

While mortgage problems in U.S.A. continue to crush real estate sector throwing existing home sales to 5.5 millions in August (in July this number was 250,000 higher), consumer confidence - one of the main indicators of economy potential fall below any expectations by almost 6 points.

Considering the latest FOMC decision on interest rates it is not really hard to predict their reactions if today’s news releases will set a tendency for the next month, leaving Fed with bad macroeconomical data. Then another 0.50% can be cut by the end of 2007 and EUR/USD may pass 1.4500 level without a stop.

EUR/USD today is showing a very intensive bearish rally dropping to 1.3700 level after failing to take over the 1.3850 resistance mark. The major reason for such market behavior can be seen in a technical correction which should have came after the overbought condition in EUR/USD reaches its peak. Personally I thought that this correction will come a bit later letting the EUR/USD to get higher before falling down, but market is market - U.S. dollar is rallying despite of bad macroeconomic statistics which came out today.
Existing home sales - a major indicator of the U.S. economy since the crisis in the real estate sector began earlier this year - came out at 5.75 million units - below the expected 5.90 million and below the previous number of 5.98 million in May.
Crude oil inventories in the week ending on July 20 declined by 1.1 million barrels, while the motor gasoline inventories rose by 0.8 million barrels and distillate fuel inventories increased by 1.5 million barrels.

Forex market was quite predictable today after the data on the Existing Home Sales for April came in 15:00 GMT. This macroeconomic indicator showed very poor results - 5.99 millions against 6.13 millions expected (and 6.15 millions in March). After these data came out EUR/USD gained nearly 50 pips (up to 1.3572) as the low activity in the realty industry can mean a general weakness in the U.S. economy. EUR/USD has almost fully rolled back already. But the great thing is that every Forex trader can always use monthly Existing Home Sales report to gain some fast profit on this news reaction.