Forex Blog

The U. S. dollar gained against the euro and the pound today after the release on personal income and spending came out. EUR/USD fell down from 1.5813 to 1.5761, while GBP/USD slid down from 2.0071 to 1.9947.

Personal income rose 0.5% in February — above the forecasted and the previous month’s 0.3% growth. Personal spending grew at a very slow pace in February; it rose 0.1% — the same as it was expected and lower than the previous 0.4% growth.

Michigan Sentiment Index final value for March was released today at 69.5 — below the expected 70.0 and the February’s 70.8.

During the last nine days, only one day didn’t bring a new absolute record level on EUR/USD; it was last Friday, March 7. Today EUR/USD reached a new maximum value at 1.5687 renewing the yesterday’s record at 1.5644.

In February seasonally adjusted CPI didn’t change at all according the report of the Bureau of Labor Statistics. In January it grew by 0.4% and for this month the majority of the market analysts expected a 0.3% growth.

March preliminary Michigan Sentiment index was released at 70.5, while it was expected to fall from 70.8 to 69.5.

The  U. S. managed to fall to another record low value today at 1.5238 per euro but recovered from a daily loss and even gained somewhat against the European currency. Personal income statistics was a little better than expected today and Michigan consumer confidence index was also revised towards the improvement.

Personal income in January rose by 0.3% — better than the expected 0.2%, but this growth was lower the December’s 0.5%. Personal spendings grew also better than expected — 0.4% against 0.2%; in December they grew by 0.3%.

Chicago PMI (it measures the business’s health) fell sharply in February from 51.5 to 44.5. It fell even below the market analysts’ expectations that were at 49.5.

Michigan Sentiment Index (it measures consumer confidence) for February was revised today from 69.6 to 70.8, while the consensus value for the revision was at 70.0.

Nonfarm payrolls is one of the most important indicators of the U.S. economy’s health. Market analysts expected it to grow up in January by 50,000. But in reality it didn’t grow at all, instead it dropped by 17,000. At first, this fueled dollar bears’ activity and drove EUR/USD up close to the historical borders, but then, after release of some other important indicators, it went down to about 1.4800.

The part of the employment report was the U.S. unemployment rate in January — it fell down from 5.0% to 4.9%.

Construction spendings in December fell down by 1.1%, faster than the analysts expected (0.5% drop).

Non-manufacturing ISM report on business activity in January resulted in PMI at 50.7%, showing an increase from the last month’s 48.4% and that it’s significantly better than the forecasted 47.5%.

Index of Consumer Confidence, reported by Reuters and University of Michigan, fell to 78.4 in January from 80.5 in December. Expected value for this indicator was 79.0.

Euro is dropping down against the U.S. dollar for the fourth day in a row now. Declining stock markets force traders to cash out into dollars, increasing the demand for them. Today’s fall is minimal (less than 20 pips), but still keeps euro from rising and dominating over the dollar as it has been doing in 2007.

Leading indicators in U.S. released by the Conference Board showed a decrease in December by 0.2% after 0.4% drop in November, but still worse than 0.1% decline that was expected by the markets.

Reuters/University of Michigan released the preliminary results of its sentiment index today showing the unexpected rise from 75.5 to 80.5, while analysts expected a drop to 74.5.

U.S. dollar looks unsure whether to fall or to rise on the Forex market after some important macroeconomic indicators were released today. One of the most important data came out from the University of Michigan and Reuters - Michigan Sentiments Index, which represents consumer confidence. Consumer confidence is important, because it will determine future consumer spendings that in their turn fuel the U.S. economy growth.

Michigan Sentiments Index in November was 76.1; it fell by 4.8 points compared to its October value of 80.9. But according to over-pessimistic expectations (that were at 75.0), Michigan index did quite well this month. Of course, objectively it didn’t.

Initial jobless claims for the previous week were released today by the U.S. Department of Labor. They fell right into the market forecast value of 330k, lower than last week’s 341k (revised from 339k).

Leading market indicators are considered to be weak in their influence on markets behavior, but nevertheless their value for the October reflects current U.S. economical situation - decrease by 0.5%, below 0.3% expected drop and, of course, worse than 0.3% growth in September.

And with the U.S. commercial crude oil inventories another falling week, oil can be expected to see new record highs in the next days. Crude oil inventories decreased by 1.1 million barrels last week, following the 2.8 growth on previous week. High oil prices may hit dollar on Forex, pushing to the new bottoms.

After yesterday’s EUR/USD high peaks dollar is showing a good trend today moving the EUR/USD pair back to below 1.4200 levels hitting bottom 1.4150 mark. That of course can be considered as an ongoing correction for the previous weeks growth of Euro, especially considering that there were too few good news for the U.S. economy on which the dollar growth could have been based.

Monthly retails sales report for the September was among good news - 0.6% growth (0.2% was the expected value).

Producer Price Index came out good to with 1.1% growth against 0.5% expected by analysts. But the core component of PPI was very low - just 0.1% (0.2% expected). So, the big growth of PPI can be accounted on the recent oil price rally.

Among bad news, the business inventories in August added only 0.1%, which significantly below the already pessimistic forecast of 0.3% growth.

Continuing its stagnation and some recent decrease Michigan Sentiment index (preliminary!) showed a decrease from 83.4 to 82.0 points, thus not meeting the optimistic expectations (84.0).

EUR/USD dropped to its more than two weeks old minimum touching 1.3630 today while the market expected good data on GDP of United States for the seconds quarter of 2007. Breaking below 1.3230 for EUR/USD will mean a big trend breakout, but while it is traded higher a temporal correction should be considered.
U.S. GDP in Q2 2007 rose by 3.4% - a very good increase after 0.6% (revised from 0.7%) in Q1. It is also greater than expected number - 3.2%. Chain deflator for Q2 came out slightly lower than expected - 2.7% against 3.4% expected. Overall these are quite good results for the Q2. If U.S. economy can keep up with this pace in the second half of 2007, then it would add some more power to both stocks and Forex markets.
Today also Michigan Consumer Sentiment Index for July became available - 90.4 against 91.5 - lower than expected but still at a high level, showing a good sign for the U.S. economical health in general.