Gauntlet of Recession Will Be Tested

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The USD gained against the major currencies on Friday on a day of little major economic data. Range trading dominated the currency markets last week and Friday was no different except the USD did find itself pushing the other currencies back. Trading today could prove to be noteworthy if the greenback were to somehow continue its stronger stance. U.S. equity markets found themselves malingering on Friday as they have done for about the past two weeks. The equities have certainly held onto their gains made since their March lows but they have showed great reluctance as of late to traverse higher. The USD appears to have found strength this past week based on the uncertainty and skeptical approach many market participants still exude. The University of Michigan Prelim Consumer Sentiment survey was released before going into the weekend and turned in a slightly more negative reading of 69.0 compared to the estimate of 69.5.
The Empire State Manufacturing Index is on schedule today and is estimated to have a reading of minus -4.7, which would be worse than last month’s number. Also the TIC Net Long Term Purchases data will be released from the Treasury and a projection of 58.1 billion stands. Tomorrow Building Permit and Housing Starts figures will be presented. The combination of the manufacturing and housing data could be enough to set off the marketplace if enough of a surprise were to be delivered. Wednesday could be a critical day for the market because CPI numbers are on schedule from the States and it will be interesting to see how the higher price of Crude Oil has translated into the gauntlet consumers have had to deal with the past month. While many continue to speak about the possibility of a recovery coming sometime at the end of this year, others point out that stability does not necessarily mean that growth will follow. The USD has shown signs of reawakening. In an environment in which investors appear to be weary, the greenback could prove an important focal point this week.

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