Following yesterday’s holiday observances, the US dollar has made strides against currencies like the Pound Sterling and Canadian dollar this morning. Four major themes are prevalent on the session and supporting the greenback as we head into the midday.
Home Depot Earnings
Bolstering equity markets on the session, Home Depot raised its full year outlook and reported earnings that beat analysts’ estimates. The upgrade in forecasts is mainly seen as a result of recent stabilization in the country’s housing sector, lending a bullish bias on the US economy – and good for the US dollar. The company’s quarterly results are expected to rise once again as repairs from Hurricane Sandy are likely to further gains in the coming quarter.
Obama Meets With Policymakers, Business Leaders
In an effort to avert the impending Fiscal Cliff, US President Obama has invited Congressional leaders of both parties this week to discuss immediate concessions that could be made to further a deal before yearend. President Obama will additionally be meeting with American business leaders from major corporations tomorrow. The meetings are key in working towards an agreement before tax increases and massive government spending cuts begin January 1, 2013. It also alleviates bearish sentiment over the US dollar, as it raises the possibility of a resolution that will keep the economy on its recovery track. The $607 billion Fiscal Cliff is expected to plunge the US economy into a severe contraction by the first half of next year.
US Retail Sales Expectations
Speculation is high that economic growth indications will be apparent tomorrow when the US Commerce Department reveals US retail sales figures for October. Although the month’s tally isn’t going to compare to September’s 1.1% gain, expectations are for an unchanged result. This would be the fourth month in a row that sales have remained positive, a bullish indication for the US economy – which is expected to expand by over 2% on the year.
Although the US dollar has made headway against the Canadian dollar on the morning, jumping from support at 0.9986, there is a looming resistance level that could place the current momentum in jeopardy at 1.0050. A failure to break above the figure would prompt short term selling, and a retest, of initial support at 0.9986. A subsequent violation lower would open the door for a decline to 0.9960.
Source: FXTrek Intellicharts