Forex Blog

EUR/USD reached a new record high level at 1.5913 today, but after some positive fundamental data was released in U.S. the currency pair went down, as the dollar started to regain strength on the Forex market. ECB’s decision to hold the interest rates at 4% also improved dollar’s positions on the market.

Initial jobless claims unexpectedly fell by 53k the last week — from the revised 410k value to 357k. A fall to 383k has been expected by the market analysts.

February U.S. trade balance deficit came out to be far worse than the majority of the investors expected — $62.3 billion, up from January’s $58.2 billion. It was expected to go down to $57.4 billion.

Treasury budget deficit was lower than the expected $70.3 billion value in March. It was $48.1 billion — better than the last year’s $96.3 billion deficit for the same month.

Although the U.S. trade balance deficit in January has actually widened compared to December’s revised value, it was significantly below the analysts’ expectations. The negative difference between the exported and imported goods’ value was at -$58.2 billion which is slightly above the December’s -$57.9 billion (revised up from -$58.8 billion). The trade balance deficit was expected to increase from $58.8 billion to $59.0 billion. The reason for the deficit "widening" was that the imports grew faster than the exports in January.

EUR/USD reacted sharply on the trade balance news release and went down from 1.5455 at the time before the release to about 1.5327 as of 14:22 GMT.

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.

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 was ranging today inside the yesterday’s rate limits which were formed with the bullish tendencies triggered by the Tuesday FOMC meeting’s statement. Main operational interest rate in the United States was cut by 25 basis points, which equals 0.25% - from 4.50% to 4.25%, while futures markets for the interest rate predicted a 0.50% cut.

Today came out the information on the international trading balance deficit for October 2007 - it increased from $57.1B (a revised value from $56.5B) to $57.8B, while only a mild growth to $57.0B was expected. The reason for the deficit growth was in the fact that imports growing faster than the exports.

U.S. crude oil inventories already made it a habit to drop every week, like there are not enough reasons for the oil prices rally yet. Last week inventories fell by 0.7 million barrels after 8 million decline in a previous week.

Meanwhile federal budget deficit appeared above the average expectation value of $90.0B. In November it went up from the October’s $55.5B to $98.2B.

A significantly improved trade balance of the United States was reported today with the value of -$57.6B ($1.6B improvement from previous month). While narrowing trade balance deficit is a good news for the whole U.S. economy a reaction on this news wasn’t very good on the currency market. Dollar stopped its strengthening and gave up almost 100 points against Euro currency hitting 1.4240 daily maximum on EUR/USD.

Some other good news came from employment sector of the economy, showing that only 308k jobless claims were issued last week, which is slightly better than 320k of the previous report.

On the bad side U.S. oil inventories had a rather sharp fall last week - 1.7M barrels, which is especially worrying just before the heating season. But the whole inventories volume is above average level, so it might be not so bad after all.

EUR/USD dropped to its new mid-term minimum (since 07/02/2007) at 1.3560, continuing its fall after the major currency intervention by European Central Bank, which took place yesterday to prevent a possible low liquidity on the financial markets of the European Union. Some good macroeconomic news released in U.S. added some fuel to dollar rally.
Producer Price Index came out at 0.6% increase compared to 0.1% consensus value and -0.2% previous value. Core component of PPI was worse but not dramatically - 0.1% of growth compared to 0.2% in forecast.
U.S. Trade Balance report showed some psychologically positive numbers. Unfortunately for the U.S. they are still mathematically negative, but nevertheless trade balance deficit continue to decrease. In June it was -$58.1 billions ($2.9B better than expected and $1.1B better than previous month).

EUR/USD, showing three days of straight growth with new monthly maximums every day, slightly lowered its rally today. Almost touching 1.3800 this currency pair stopped at 1.3797 and then rolled back for around 20 pips. Meanwhile, initial jobless claims for the previous week came out better than expected - 308,000 against 320,000 claims. U.S. trade balance came out at the expected level - $60.0 billions. If tomorrow Friday will be bullish and the 1.3800 level be broken a larger scale uptrend for EUR/USD will begin.

U.S. dollar rallied to its two months low at 1.3320 today. Surprisingly the United States Trade Balance Deficit for April 2007 was reported almost 5 billion dollars lower than predicted $58.5 billion, whereas March Trade Balance Deficit was revised to $62.4 billion (almost a billion lower than previous value). Trade Balance Deficit tightening was caused by both lower import and higher export which is a very good sign for the U.S. economics. But this wasn’t the main reason for today’s EUR/USD correction, the main reason was the higher yield for U.S. bonds which broke through 5.00% yesterday and now many long term investors need to buy dollars to get into the bonds.