Forex Blog

EUR/USD rose from 1.4575 to 1.4635 today after the news from the U. S. Department of Labor and the U. S. Census Bureau arrived. Despite them being better than expected, they failed to stop dollar or even stock markets from declining today.

Initial jobless claims for the last week went down from 357,000 to 348,000 — slightly better than it was expected by the markets (350,000).

Trade balance deficit in U.S. decreased in December from $63.1 billion to $58.8 billion — much better than it was expected ($61.5 billion). Exported grew by more than two billion dollar, while imports dropped by almost the same value.

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.

Today, EUR/USD lost a small part of the pips that were gained yesterday after the Fed’s interest rate cut by 0.50%. Even the bad employment statistics didn’t prevent dollar from recovering from 1.4860 to 1.4814 against European currency. This can be also partially explained by the major resistance level that has formed near 1.4870 rate on EUR/USD.

Personal income in December rose by 0.5% — better than the analysts expected (0.4%), which can be a good sign for U.S. economy. Personal spendings were at 0.2%, higher than the expected value, but lower than 1.1% growth a year earlier. Core PCE inflation, as expected, didn’t change and was at 0.2% last month.

Initial jobless claims report showed a very disappointing dynamic this time — last week claims grew up from 306,000 (revised from 301,000) to 375,000 — that’s much more than 320,000 predicted by the economic experts.

Chicago PMI — the index of business purchasing activity — fell below the expectations (53.0) fro, 56.4 to 51.5.

Crude oil inventories in U.S. continued weekly growth trend and rose 3.6 million barrels last week, which is nothing but a good sign for the dollar, as the oil prices may stop affecting it negatively.

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.

Euro tries to reclaim the pips it lost yesterday during one of the strongest falls of the recent days. Yesterday EUR/USD lost 152 pips or more than 1% of its rate. Today only a small recovering is seen with no more than 30 pips trailback, which can be easily accounted to the technical correction. Overall picture of the EUR/USD daily chart more and more reassembles the “head and shoulders” pattern. Some average fundamental data were released today and are not currently affecting the dollar.

Housing data from U.S. was disappointing today. Building permits in December fell by a larger extent than it was expected going down 1,162,000 to 1,068,000. Meanwhile the housing starts for the same month dropped to 1,006,000 from 1,173,000 (revised from 1,187,000).

Initial jobless claims fell down by 21,000 and were at just 301,000 last week, while growth from 322,000 to 335,000 was expected by the market analysts.

Philadelphia Federal Reserve’s business activity index in January unexpectedly fell to -20.9, the lowest value since the October 2001, when it fell down after 9/11 attacks.

Today the European Central Bank decided to leave the interest rate unchanged at 4.00%, as it was expected by the markets. But the EUR/USD went up after the decision became known - the currency pair gained more than 70 pips. What has caused that? Along with the rate decision ECB announced another $20 billion intervention to the banks to add more dollar liquidity. That greatly cut the dollar’s position on Forex, especially against European currency.

Positive to the U.S. dollar was the weekly report on the initial jobless claims - last week they dropped from 337k to 322k, while a gain up to 340k has been anticipated by the market analysts.

Wholesale inventories (business) rose up by 0.6% compared with the October’s 0% unchanged value. Economic strategists forecasted only 0.4%, so this is a good news for dollar bulls.

Despite the holidays period has already came to the U.S. and European markets, EUR/USD is rallying up fast for the second day in a row now. And if today there is plenty of fundamental news that can push euro up by almost 100 pips against U.S. dollar, yesterday’s bullish candle has no such reasons.

Today, the employment market of U.S. showed that it is suffering because of the subprime lending crisis too, initial jobless claims continue to grow - 349k against 340k expected, previous week value was also revised up from 346k to 348k.

November durable goods orders hadn’t met the hopes of the analysts that expected 2.2% growth, it was reported at 0.1% - though, still better than the October’s decline by 0.4%.

December Consumer confidence index reported by Conference Board was the only good indicator which came out in United States today - it grew up from 87.8 to 88.6.

Crude oil inventories fell during the week ending December 21 by 3.3 million barrels. And now Department of Energy says that at 293.6 million barrels they are in lower half of the average range for this time of year.

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.

EUR/USD began the day with some slow downtrend, but continued to accelerate its bearish tendencies after news releases from U.S. showed some well above average macroeconomic stats.

Advance retail sales report for November from U.S. Census Bureau showed that this indicator increased by 1.2% compared with October - much better than 0.6%, which was expected by the market analysts.

The Producer Price Index (PPI) in November rose by surprising 3.2%, compared with 0.1% in October and 1.5% expected growth.

Initial jobless claims for the week ending December 8 were also released today - 333k against 340k (revised up from 338k) last week and below the 335k, as the economists were expecting.

Manufacturing and trade business inventories in October increased by 0.1% - less than expected value of 0.3% growth rate.

EUR/USD confirmed its downtrend intentions today falling from yesterday’s retracement to 1.4740 level. One of the reason for a stronger dollar can be seen in expectations for the increased real GDP growth in third quarter of 2007.

U.S. Bureau of Economic Analysis released its preliminary report on real Q3 Gross Domestic Product. The growth was higher than the previous advance value for third quarter - 4.9% against 3.8% and the same as analysts expected (that were quite optimistic with this indicator). As it was stated by Bureau, the growth was mainly caused by increased exports (thanks to a cheap dollar, I suppose).

Initial jobless claims report for the last week was opposite to GDP. In the week ending Nov. 24, the advance figure for seasonally adjusted initial jobless claims was 352k. That is 23k above the previous revised (from 330k) value of 329k and expected 330k.

New home sales disappointed dollar and U.S. stocks bulls too. Annualized and seasonally adjusted October number was just 728,000 whereas at least 750,000 were expected. And September value was also revised down from 770,000 to 716,000.