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European and US summary

USD Shrugs off Soft Data

Thu, May 15 2008, 18:13 GMT
by Korman Tam

Forexnews.com

5/15/2008 1:30 PM: EUR/$..1.5432 $/JPY..104.88 GBP/$..1.9445 $/CHF..1.0578 AUD/$..0.9378 $/CAD..1.0015

USD Shrugs off Soft Data

The dollar was initially softer against the euro and yen in the Thursday session following soft US economic reports earlier in the morning. Weekly jobless claims increased to 371k, versus 365k in the previous week. The NY Fed manufacturing survey deteriorated to a reading of minus 3.23 in May, versus 0.63 in April. Meanwhile, industrial output in April declined by more than expected, posting a 0.7% decline versus a 0.3% increase while capacity utilization fell to 79.7% from 80.5% a month earlier. The May Philadelphia Fed business index improved to -15.6, better than estimates for an improvement to -19.0 from -24.9 from April.

The economic calendar for Friday consists of April building permits, housing starts, and the May University of Michigan sentiment survey.

 
Euro Initially Higher on Growth Data

The euro climbed above the 1.55-level overnight, rising to 1.5546 against the greenback. The catalyst for the move higher was better than expected economic reports from the Eurozone. Germany¡¯s economy expanded at its strongest pace in 12-years, with Q1 GDP sharply exceeding consensus estimates at 1.5%, up from 0.3% in the previous quarter while expanding at 1.8% versus 1.6% a year earlier. Inflationary pressures in Germany also eased. The final reading for April CPI declined by 0.2% versus a 0.5% increase in March and down to 2.6% from 3.1% in the previous year. The April HICP declined by 0.3% from 0.5% a month earlier and lower to 2.6% versus 3.3% a year earlier.

Data also revealed the Eurozone economy expanded by 0.7% in Q1, beating calls for a slight increase to 0.5% from 0.4% in the prior quarter, while the annualized growth rate held steady at 2.2%, defying calls for a decline to 1.9%. The reports reinforce sentiment that the ECB will likely keep interest rates unchanged for the remainder of the year while maintaining its tightening bias.

EURUSD relinquished its earlier gains by the New York afternoon, pulling off to 1.5420. Support begins at 1.54, followed by 1.5360 and 1.5330. Additional floors will emerge at 1.53, backed by 1.5270 and 1.5240. On the upside, resistance starts at 1.5450, followed by 1.55 and 1.5540. Subsequent ceilings are seen at 1.5570 and 1.56.

Published on  Thu, May 15 2008, 18:14 GMT

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