By Mercaforex
We have seen the USD trading to the weaker side of its range for a week and a half now against the EUR and GBP. The U.S. stock markets surged on Thursday and the Dow Jones Industrials finished above the 9000 mark for the first time since January. It can be debated long and hard on exactly why the stock market has decided to drive upwards. It may very well be a case of the market looking ahead which has been a long standing characteristic. However it must be pointed out that summer trading is certainly entrenched, this as low volume is creating conditions of self fulfillment, in other words sentiment may be driving this market more than reality. Microsoft released its data last night and it proved very disappointing. Whether that will affect equities today remains to be seen. The USD has reacted in a rather predictable way during this stretch. The greenback lost ground much of the day as the stock markets turned in good results. Microsoft released its earning after the market closed and this could put some caution into early trading today, but it will take a brave investor to stand in front of this rally.
Unemployment Claims were published yesterday and produced a number of 554K, worse than the estimate of 551K. Also Existing Home Sales were brought forth also and had a figure of 4.89 million compared to the estimate of 4.82 million – hardly anything to write home about. Thus, the unemployment picture in the U.S. has continued to show weakness and is sure to remain a thorn in the side of American consumers who are likely to show restrained spending until they feel secure about their jobs. Today the University of Michigan will issue its Revised Consumer Sentiment report and it expects a reading of 65.1. The currency markets however are probably going to focus on Wall Street going into the weekend. The price of shares may have gotten ahead of themselves and some traders may be tempted to see if the market is overstretched. The recent trend in equities has been strong and the question is how much steam does this engine have? The USD has struggled in the midst of the equity move and traders will probably watch share prices to gauge their positions today.
EUR:
The EUR had been gaining on the USD in many respects due to the positive results flowing from the bourses for the past two weeks. Yesterday the Current Account data for Europe showed an outcome of minus -1.2 billion, but this was better than the negative expectation of -3.6 billion. The EUR has not had a lot of hard economic data to trade on the past week but this will change a bit today with the publication of PMI data from across the continent. Also the German Ifo Business Climate survey will be released which could stir interest. Both the Germans and French will release their Flash Manufacturing and Services PMI results. The German Flash Manufacturing number is expected to be 42.1, which would be an improvement over the previous month. In fact all the German and French reports on schedule are anticipating better readings. The crux of the matter for the EUR however may continue to be the affects that share prices have on the currency like all of its counterparts. The EUR has staged a good trend the past two weeks and it is likely to move in an equity driven fashion going into the weekend.
GBP:
After Wednesday’s strong showing by the Sterling, the GBP did not give back its gains on Thursday. Retail Sales numbers were released from the U.K. and they produced a gain of 1.2%, better than the forecast of 0.4%. Also the BBA Mortgage Approval data was brought forth and its outcome was a number of 35.2K, higher than the estimate of 32.3. All eyes will be on the Prelim GDP statistics that the U.K. will publish today. The Prelim GDP is anticipated to show a decline of minus -0.3%. It is no secret that the recession has not ended in the U.K. and this report will be a strong indication whether the economic downturn has begun to show stability. Investors who have been allowing their positive sentiment to grow will face a true test with the GDP results. The Sterling has produced solid marks the past two weeks and has climbed back to the strong side of its range against the USD and the GDP numbers today will affect the GBP.
JPY:
As international equities surged again on Thursday the JPY lost value to the USD as risk appetite showed signs of increasing among Asian investors. The JPY has been going back and forth within a fairly consolidated trading range against the greenback for several months. Gold traded in a tight range yesterday as its recent run upwards may have run into some cautious trading as it nears the higher end of its range, it finished the day around 949.00 USD.
We have seen the USD trading to the weaker side of its range for a week and a half now against the EUR and GBP. The U.S. stock markets surged on Thursday and the Dow Jones Industrials finished above the 9000 mark for the first time since January. It can be debated long and hard on exactly why the stock market has decided to drive upwards. It may very well be a case of the market looking ahead which has been a long standing characteristic. However it must be pointed out that summer trading is certainly entrenched, this as low volume is creating conditions of self fulfillment, in other words sentiment may be driving this market more than reality. Microsoft released its data last night and it proved very disappointing. Whether that will affect equities today remains to be seen. The USD has reacted in a rather predictable way during this stretch. The greenback lost ground much of the day as the stock markets turned in good results. Microsoft released its earning after the market closed and this could put some caution into early trading today, but it will take a brave investor to stand in front of this rally.
Unemployment Claims were published yesterday and produced a number of 554K, worse than the estimate of 551K. Also Existing Home Sales were brought forth also and had a figure of 4.89 million compared to the estimate of 4.82 million – hardly anything to write home about. Thus, the unemployment picture in the U.S. has continued to show weakness and is sure to remain a thorn in the side of American consumers who are likely to show restrained spending until they feel secure about their jobs. Today the University of Michigan will issue its Revised Consumer Sentiment report and it expects a reading of 65.1. The currency markets however are probably going to focus on Wall Street going into the weekend. The price of shares may have gotten ahead of themselves and some traders may be tempted to see if the market is overstretched. The recent trend in equities has been strong and the question is how much steam does this engine have? The USD has struggled in the midst of the equity move and traders will probably watch share prices to gauge their positions today.
EUR:
The EUR had been gaining on the USD in many respects due to the positive results flowing from the bourses for the past two weeks. Yesterday the Current Account data for Europe showed an outcome of minus -1.2 billion, but this was better than the negative expectation of -3.6 billion. The EUR has not had a lot of hard economic data to trade on the past week but this will change a bit today with the publication of PMI data from across the continent. Also the German Ifo Business Climate survey will be released which could stir interest. Both the Germans and French will release their Flash Manufacturing and Services PMI results. The German Flash Manufacturing number is expected to be 42.1, which would be an improvement over the previous month. In fact all the German and French reports on schedule are anticipating better readings. The crux of the matter for the EUR however may continue to be the affects that share prices have on the currency like all of its counterparts. The EUR has staged a good trend the past two weeks and it is likely to move in an equity driven fashion going into the weekend.
GBP:
After Wednesday’s strong showing by the Sterling, the GBP did not give back its gains on Thursday. Retail Sales numbers were released from the U.K. and they produced a gain of 1.2%, better than the forecast of 0.4%. Also the BBA Mortgage Approval data was brought forth and its outcome was a number of 35.2K, higher than the estimate of 32.3. All eyes will be on the Prelim GDP statistics that the U.K. will publish today. The Prelim GDP is anticipated to show a decline of minus -0.3%. It is no secret that the recession has not ended in the U.K. and this report will be a strong indication whether the economic downturn has begun to show stability. Investors who have been allowing their positive sentiment to grow will face a true test with the GDP results. The Sterling has produced solid marks the past two weeks and has climbed back to the strong side of its range against the USD and the GDP numbers today will affect the GBP.
JPY:
As international equities surged again on Thursday the JPY lost value to the USD as risk appetite showed signs of increasing among Asian investors. The JPY has been going back and forth within a fairly consolidated trading range against the greenback for several months. Gold traded in a tight range yesterday as its recent run upwards may have run into some cautious trading as it nears the higher end of its range, it finished the day around 949.00 USD.