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Dollar Slightly Down But Spike Hints Bearish Sentiment

September 30, 2009 by

The U.S. dollar dropped against the euro today after some rather good fundamental reports on employment and total economic output. But the upward spike on the EUR/USD chart, which is significantly higher than the daily gain hints that the bearish sentiment among the traders is still quite strong near 1.4670 level. Currently, EUR/USD is trading near 1.4517.

ADP employment change report for September 2009 showed a decline by 254k jobs — that’s better than August’s 298k drop, but is worse than only 200k drop forecasted by the analysts.

U.S. GDP change for the 2nd quarter of 2009 received it final revision report today, which showed a decrease by only 0.7%, compared to 1% drop in the previous report and 1.2% decline forecast.

Chicago PMI fell from 50.0 to 46.1 in September, reflecting the pessimistic expectations of the manufacturing industry managers in the region. The index was expected to rise to 52.0.

U.S. crude oil inventories increased by 2.8 million barrels last week, while the total motor gasoline inventories decreased by 1.6 million barrels during the same period of time.

If you have any comments on the recent EUR/USD action, please, reply using the form below.

2 Responses to “Dollar Slightly Down But Spike Hints Bearish Sentiment”

  1. David

    Great article, I was surprised to see crude oil inventories increased. Do you think there is a correlation between the US Dollar and the price of oil? If so, what is the correlation and why does it exist?

    Reply

    Andrei Reply:

    I believe that there’s a strong inverse correlation between the crude oil price and the U.S. dollar performance against the other currencies. Although the exact mechanism of this dependence isn’t known to me, I believe that the cheaper dollar forces investors to hedge using commodities, while the expensive dollar signal elevated risk and thus forces investors out of commodities.

    Reply

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