Daily FX Commentary
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US deterioration to test dollar confidence
Mon, Nov 17 2008, 12:09 GMT
by Tim Clayton
The Euro was unable to sustain gains above the 1.28 level on Friday and weakened to lows near 1.26 as Wall Street dipped sharply in late trading.
The US data maintained a weaker tone on Friday with a particular focus on retail sales. There was a headline sales drop of 2.8% for the month while there was also a 2.2% underlying decline.
The weak data was certainly expected, but the sharp decline in sales will reinforce fears over the economy, especially as the ECRI leading index deteriorated at the fastest rate for 60 years. The University of Michigan consumer confidence index offered some relief with a marginal rise as gasoline prices fell, although it was historically very weak. Discussions surrounding the US auto sector will remain a very important short-term focus and political tensions surrounding the sector are liable to unsettle the US currency.
There was some disappointment that the G20 summit concentrated on a general message that further action would be taken rather than announcing any new policy initiatives. The Euro was below 1.26 on Monday before rallying back above this level.
Published on Mon, Nov 17 2008, 14:56 GMT
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Investica Ltd
http://www.investica.co.uk | tim.clayton@investica.co.uk
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Investica's market analysis is not investment advice and must not be taken as recommending particular market positions. Investica can take no responsibility for any actions taken by investors.Related reports
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