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Poor U.S. Macroeconomics Push Dollar Down

February 15, 2008 by

This week ends far worse for dollar bulls than they may have expected. Only Wednesday was an uptrend day for the U.S. dollar, but it didn’t gain a lot that day. Friday brought in the break through the 1.4700 resistance level on EUR/USD. Some disappointing data on the net foreign purchases and the manufacturing survey were the most important causes of today’s dollar’s decline.

Export and import prices in January grew faster than expected and this can be a positive sign for U.S. economy. Export prices index increased 1.2%, while import prices index increased 1.7%. Expected levels of growth were 0.3% for both of them.

NY Empire State Index — compiled through a survey of manufacturing sector — showed a very sharp decline this month. It went down from 9.0 to -11.7. For the first time since May 2005 it slid down below the zero level .

Net foreign purchases of the long-term securities in December were at $56.5 billion, which is much lower than $76.0 billion expected. Now the inflow barely covers the U.S. trading deficit.

Industrial production and capacity utilization in January weren’t good or bad, they were at the same levels as they have been expected by the analysts. The industrial production grew by 0.1% (the same as in December), while the capacity utilization was at 81.5% (the same as revised December’s value).

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