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Consumer Prices and Housing Fall in U.S., Dollar Goes Up

November 19, 2008 (Last updated on November 27, 2008) by

EUR/USD jumped up today after the two important macroeconomic reports were released today — CPI and new housing starts. But after reaching a peak at 1.2813 EUR/USD corrected and snapped the daily growth. The currency pair is now trading near 1.2578.

Consumer Price Index (CPI) decreased by 1% on a seasonally adjusted basis in October. This declined followed the stagnation in September and exceeded analysts’ forecast (0.8% fall). The lower prices were mostly caused by the cheap oil and energy components.

Housing starts were reported at seasonally adjusted annual rate of 791,000 in October, down from 828,000 in September. It’s still better than the average forecast — 708,000. Building permits at seasonally adjusted annual rate of 708,000 in October — below both 805,000 in September and 772,000 forecast for October.

U.S. crude oil inventories added 1.6 million barrels during the week ending on November 14th after remaining unchanged a week before. They are still in the upper half of the average range for this time of year.

The FOMC minutes for September 29 and October 7, 28-29 meetings were also released today. But they didn’t change the way the currencies are trading much, because, despite the large portion of the information presented in the report, there was little new for the traders in the them. The main idea is that the economy is deteriorating, the liquidity is low and the inflation is out of the focus. Fed projects that the GDP will continue to fall down in the second half of 2008 and in the first half of 2009, picking up in the late 2009 and beginning a normal growth in 2010. Fed looks quite optimistically on the markets’ future, considering the measures taken by the Federal Reserve itself, the government of the United States and the central banks of the other countries.

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