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FX Daily Update

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Dollar Strong No Matter What!

Fri, Nov 28 2008, 14:53 GMT
by Lena Manousarides

FXstreet.com Independent Analyst Team

Another week is finishing with markets trading still on positive territory as NIKEI was up more than 100 points and European session seems to want to go this way also. With US markets close for Thanksgiving Day yesterday, the action was very limited and although thin trading conditions usually spark big moves that was certainly not the case yesterday!

EUR/USD is trading lower today after the pair was not able to take out 1.2950 yesterday. A clear break of 1.28 indicated that the downside is still alive and the move could continue down to 1.27 and even lower. Next level to watch is 1.2680 ahead of 1.2630.

Today the economic calendar had releases out of UK and Europe and all the data were negative with Euro zone CPI printing very low numbers and unemployment getting higher for the month. The sentiment in Europe fell again and therefore the European single currency lost ground once again against its other counterparts. The data out of UK were not better either with CBI sales coming out much worse than expected and the pound getting the worse of it so far.

GBP/USD is trading lower again and 1.55 so far seems to work as a resistance. The correction from 1.47 to 1.55 is done and dusted and the pair looks open for further losses. Let’s not forget that investor’s confidence when it comes to the pound is very low and getting even lower with new economic data who only emphasize what we already know: that the country is suffering a severe economic crisis and looks like it will for the time being.

It will be interesting to see how DOW JONES will open today and if the positive sentiment we saw in the beginning of the week continues for another day. The risk aversion is back in the markets and the uncertainty for the future is real. Investors are taking each day as it comes and are far from ready to commit either way until they receive some kind of proof that a better tomorrow is on its way.

Aside from that, oil is trading down today again following dollar’s strength and the higher crude inventory data the other day didn’t seem to spark an oil rally so far. Until we see a change in sentiment for a weaker dollar, oil is likely to continue to trade lower in the coming days. The fear of the global crisis is what seems to drive the markets these days and oil is certainly not an exception to this!

Let’s see how the week will end and if the gains we saw printed in the beginning of the week will be completely turned around at New York closing. It is crucial to note that today it’s the last trading day of the month and therefore we may see adjustments in trader’s positions and squaring up the gains for the month.

Published on  Fri, Nov 28 2008, 14:57 GMT