Forex Blog

EUR/USD unexpectedly fell today after the moderate fundamental statistics were released in the United States. This currency pair declined from 1.4803 opening price to 1.4656 making it the largest daily drop for EUR/USD since December 14.

CPI (Consumer Price Index) in December showed a better than expected growth, increasing by 0.3% - still lower than in previous month (0.8%), but above the forecasted 0.2%.

Net foreign purchases of the long-term securities in November were at quite a high level - $90.9 billion, but lower than October’s $114.0 billion.

December’s industrial production stalled with 0% change, but that can be considered a good news, because the negative change has been expected. Industrial capacity utilization dropped slightly, going down from 81.6% (revised from 81.5%) to 81.4%.

U.S. crude oil inventories last week showed a gain at last increasing by almost 4.3 billion barrels after the previous report of 6.7 billion barrels dropdown.

EUR/USD fell down to its monthly minimum value today as the traders expected for the CPI release for November to come out. It touched 1.4468 - the lowest value since November 6 minutes after the data was released.

Consumer Price Index in November rose at 0.6% annualized rate, as it was already expected by the majority of analysts, while Core CPI showed a 0.3% growth that month.

Industrial production and productivity numbers gave a little more surprising picture to the dollar bullish traders. Industrial production increased 0.3% in November, while capacity utilization for a total industry rose up from 81.4% (revised down from 81.7%) to 81.5%.

EUR/USD stopped its fall today and jumped back up to 1.4670 levels on Forex after today’s Federal Reserve release on industrial production. In this October industrial production fell by 0.5% after 0.2% growth in September and median expectation at 0.1% for this month. That means that FOMC will probably need to adjust U.S. interest rates once again to stimulate economy growth.

With the decrease of industrial production, economy of the Unites States showed a decrease in industrial capacity utilization (which, of course, could be a cause for production drop). It fell from September’s 82.2% to 81.7%, while an insignificant difference was expected (82.0%).

While Henry Paulson of U.S. Treasury spoke that Government will conduct a “strong dollar” policy. Its hardly can be done with such economical indicators reports. “Currency will represent the U.S. economical growth” - that was the main idea of Paulson’s speech. But if economy is taking damage? Dollar will continue its demise.

Net foreign purchases of the long-term U.S. securities in September were at $55.4 billion. This is better than the August’s negative -$33.6 billion, but worse than expected number ($66.0 billion) and average 2006 monthly net foreign purchases ($97.2 billion).

EUR/USD is closing below 1.3900 level after a major rally earlier this week. The main driver for the growth were the market expectations for the FOMC to lower the interest rates by at least 0.25% next week, while last two days’ correction can be a reflections of some less confident traders, that are sure that if FOMC won’t lower rates or will stay with 0.25% decrease for a longer period, then markets will have to play back current growth. Lack of surprise data helped the second type of traders today.

U.S. export (excluding agricultural) and import (excluding oil) prices changed by 0.1% and -0.1% respectively in August, while July brought -0.2% and 0.1% respectively.

Retail sales were up by 0.3% in August, which is lower than both July growth by 0.5% and the same expected value for August.

Industrial capacity utilization in August remained at the 82.2% level as it has been in July, while the market was expecting decline by 0.2%.

Manufacturers’ and trade business inventories rose by 0.5% in July compared to 0.4% growth in June. This is a slightly more optimistic number than 0.3% growth expected by the market.

EUR/USD hit its new significant bottom near 1.3455 level after dollar continued to grow on the high Euro liquidity level and good economical releases from U.S. Next technical support for EUR/USD lies near 1.3330 mark, so it is reasonable to expect some more USD rallying by the end of this week or next week.
Consumer Price Index (CPI) report, released by Bureau of Labor Statistics, showed 0.1% growth in July (as expected) compared to 0.2% growth in June.
Industrial Production report didn’t make any surprises too and came out with a 0.3% growth in July (in June it grew by 0.5%).
Net Foreign Purchases in July fell by $5.2B compared with June number and came out at $120.9B level, which is still historically high.

EUR/USD calmed a little today, not reaching 1.3800 level, as the majority of traders expected some important data from U.S. statistics. Data came out mixed, but generally better for dollar than for Euro. Producer Price Index in June this year showed a slight decline (-0.2%), while consensus was at +0.1%. PPI excluding food & energy to he contrary increased by 0.3% (0.2% expected). For the stock market main surprise has been prepared by the U.S. Treasury - Net Foreign Purchases in May were $126.1 billion (against $80.3B expected). Industrial production growth for June (a very important component of GDP) came out at 0.5% and the Industrial Capacity Utilization was at 81.7% (81.4% expected). So what do we get today? Very good signs of economical growth - foreign investments and high productivity - one hand, and disappointing data on inflation on the other hand. More news to come this week, so get ready for some more surprises and try to get some pips when EUR/USD starts rolling again.