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EUR/USD Extends Gains on Unexpectedly Bad Economic Indicators

July 1, 2010 by Vladimir Vyun

The EUR/USD currency pair extended its gains today as U.S. macroeconomic indicators left a very unpleasant impression today. The manufacturing sector showed a slowdown in the economic activity and home market confirmed its tremendous weakness, as pending home sales dropped a way more than was expected. Unexpected increase of jobless claims wasn’t supportive either. Is the economic recovery in the U.S. is over? EUR/USD trades near 1.2435 now.

The advance figure for seasonally adjusted initial jobless claims was 472k in the week ending June 26, an increase from the previous week’s revised figure of 459k. This reading missed forecasts, which promised a decline to 454k.

ISM PMI dropped to 56.2% in June from 59.7% in the month before. Forex traders expected much smaller decline to 58.9%. The manufacturing sector continued to grow during June; however, the rate of growth as indicated by the PMI slowed when compared to May.

Construction spending in the U.S. declined by 0.2% in May, following 2.7% increased in April. The expected change was -0.7%.

The Pending Home Sales Index dropped 30.0% in May, after it rose 6.0% in April. The reading was horrendous compared with the expected decline to 7.4%.

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

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