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Dollar Sentiment Not Too Affected By Today's Data
Fri, May 16 2008, 09:48 GMT
by Grace Cheng
GraceCheng.com
The US dollar is slightly down against major currencies like the Euro, Swiss franc, British pound and the Japanese yen Thursday. To everyone’s surprise, all is not gloom in the Eurozone. France, which is Eurozone’s second largest economy, reported today that its gross domestic product grew 0.6% in the first quarter, double that in the previous quarter, and better than the 0.5% growth expected. Even though the high Euro is hurting exports to some degree, export growth is still robust despite economic uncertainty. As for US economic data Thursday, it has been a bit disappointing, but doesn’t change the picture of a slowdown in the US. US industrial production fell 0.7% in April, following a revised 0.2% climb in March (was 0.3% in March). This drop was worse than the 0.4% drop expected. Another weak manufacturing report came from the New York Fed survey which showed that the general business conditions index tumbled into the negative territory of -3.2 in May, compared to a positive 0.6 reading in April. Many had expected the reading to come in at 0.0, and not dipping into the contraction region. However, the Philadelphia Fed manufacturing index which was the last economic release out for the day, came out better than expected, though still signaling contraction, with the headline index at -15.6 compared with a previous -24.9 and expectations centered around -19.5.
Hammering Euro Down
International Monetary Fund Managing Director Dominique Strauss-Kahn said Thursday the Euro is carrying “a bigger share of the burden than it should have” in the current climate of foreign exchange volatility. He said foreign exchange rates were one of the “big imbalances of today’s world”. ECB’s president Trichet said Thursday that second quarter growth will be less flattering than first quarter. EuroGroup chairman Juncker repeated today trends in the US dollar (that is, the current dollar uptrend) are pointing in the right direction.
Forex Trading
Despite the overall slight negative tone of US data today, dollar losses have been very limited. Euro did not gain much versus the dollar; EUR/USD went up to 1.5560, met resistance there and then fell back below 1.5500. If it falls below 1.5450, it may target 1.5400. USD/CHF fell to a session low of 1.0480, and is still capped by 1.0600.
Friday:
- Japan industrial production 0430 GMT
- Swiss retail sales 0715 GMT
- US housing starts 1230 GMT
- U of Mich confidence 1400 GMT
- Posted in Categories: Economy, Forex.
Published on
Fri, May 16 2008, 09:49 GMT
Archive
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