USD Forex-Archive

Daily Economic News - Mar 31, 2008

The Greenback heads into the last day of March prime for what could be one of the more defining points of 2008. After last week's mixed batch of economic data out of the US, the Dollar plunged against a majority of its most traded currency rivals, most notably the EUR. It was not to long ago; following the last 75bp cut, that investors thought the greenback was pulling itself out of the mud to finally ride a significant bullish trend. Instead, we enter April prime for what could be a period of record lows for the Dollar and the US economy. The US has seen its fair share of bad data, but what is so alarming lately, is the harmony at which data is failing. The housing market continues its freefall, taking with it any progress the credit sector might have made in recent future due to rates cuts, to bring the dollar to its current state. Add to that the drop in Consumer Confidence and a hefty unemployment figure from the US and suddenly talks of Recession become far more realistic. This week will see a wide range of key economic events from the US economy. ISM Manufacturing and Non-Manufacturing numbers, Factory Orders, Unemployment figures, and the ADP Employment Report highlight a busy economic week in the US. Also we await the testimony of Fed Chairman Ben Bernanke before the Joint Economic Committee of Congress on Wednesday. Bernanke will look to explain the currently grim outlook of the US economy, as Fed intervention has not provided enough to turn around the recessionary trends. Bernanke is also expected to hear questions regarding new strategies to tackle the shift in consumer behavior in the US, as we have seen an uncharacteristic fall in US consumer spending. The Fed boss will be faced with the dilemma of whether or not to sacrifice long-term strategy to cope with short-term turmoil in the market. Whatever the outcome may be from his testimony, Bernanke's comments and the figures due for release will pave the way for Friday's important Non Farm Payroll data, easily one of the most volatile events on the economic docket. Non-Farm data is expected to show that lat month another 50,000 jobs were lost, marking the third consecutive month of such behavior. Not since the onset of the Iraq War on 2003 have we seen such results. The importance of Non-Farm payrolls has been proven over and over again, as it is the most accurate employment report available, and without fails contributes radical volatility to the market each time it is released. Today we are expecting two economic events from the US. First we see the release of Chicago Purchasing Managers Index (PMI) followed by a speech by Treasury Secretary Henry Paulson. The PMI figure, which measures the health of the Chicago business environment, is expected to see a 1.5-point bump, but still fall short of showing any expansion, an accurate representation for most of the US these days. Paulson will discuss his proposed regulatory plan for the US economy; it should not contribute to market movement. It will be expected that until any surprisingly positive US data is released we will see bearish greenback trends throughout the Forex market. Commodity prices can also be expected to see a hike, as they are all still dollar dependant.

Daily Economic News - Mar 28, 2008

The USD rallied yesterday against the EUR, after a data showed that the U.S. economy grew in line with market expectations during the 4th quarter. Yesterday's finalized GDP figure eased fears of a steeper slowdown after it printed at 0.6% - unchanged from the month prior. A fall in U.S. Unemployment Claims in the latest week further helped the USD regain ground after it posted sharp losses in the last two sessions. Personal Consumption data was also dollar supportive as it unexpectedly rose to 2.3% from 1.9%. However, the data showing a decline in Jobless Claims did not change the market's view about the need for further U.S. Interest Rate cuts to boost a weakening economy. Short-term Interest Rate futures indicate that investors see a 54% chance of the Fed cutting rates by another 0.5% point in April. A 0.25% point cut has already been fully priced in. Given expectations for additional policy easing at the FOMC meeting in April, the Interest Rate gap will continue to widen, weighing on the USD in the near future. The greenback has lost 18% against the EUR in the past year as the Fed cut its benchmark interest rate 6 times to 2.25% to avoid a recession. Looking ahead, more consumer data will kick off the morning at 12:30 GMT, with the Personal Consumption and Spending index adding to the downward pressures for the U.S. dollar as both indices are expected to decline. The last release for the week will be the University of Michigan Confidence index which is due out at 14:00 GMT. Investors should look for more drops in the dollar price as there does not seem to be anything that prevents the detrimental fall of the greenback.

Daily Economic News - Mar 27, 2008

Yesterday, the greenback continued its freefall back into a tough position against most of its currency rivals. US economic data returned unexpectedly poor and took what had been a moderate bearish trend and let it loose, forcing the Dollar back toward lows against the major currencies, most notably the EUR. The EUR/USD pair soared back over the 1.58 key level, at some points peaking close to 1.59. This does not bode well for the Fed, as many will look towards them once again to tweak interest rates to cope with the weakening economy which may force even more negative pressure on the Dollar. The acceleration of the Dollar's bearish behavior came after a batch of US data came back with sub par results. Durable Goods figures came back over 1% down from already poor expectations at -1.7%, as Core Durable Goods (excluding Autos) dropped to -2.6%. New Home Sales fell for the fourth month running by just under 2% as the figure stood on 590,000, the lowest it has been since 1995. Though the figure returned higher than initially forecasted, the combination of the poor results combined with Durable Goods numbers and a small drop in Crude Oil Inventories sent the USD on a dive. The biggest concern on the return of the housing figures is that new homes are at some of the lowest average prices the American consumer has seen, and still no progress has been shown, which can only further concern investors regarding the spending of the world's biggest consumer base. Fed fund futures are now leaning toward a 50-50 chance that a rate cut of up to 50bp is to be expected by next month. What is worrisome is the lack of affect these cuts have had on the US economy. With the possibility of a US interest rate under 2%, one wonders if the Fed might be running out of solutions to pulling the US out of the depths of recession. Today we await a host of important data from the US. Unemployment Claims are due for release, and should see a return of 370,000 jobless claims for last week. This figure is down from the last number of 378,000, but will still provide no help for the greenback. Forecasts also show a 0.6% annual growth over the fourth quarter of 2007 in Gross Domestic Product (GDP). The GDP figures could be the most concerning, as the US economy has seen its slowest growth in almost 5 years. With the halt in consumer spending, rising commodities prices, labor worries, and the unforgettable housing and credit crises a US recession seems imminent. Speeches from Fed Governor Kroszner, Minneapolis Fed President Stern, and Cleveland Fed President Pianalto will round out the economic calendar for Thursday, as we should expect more bearish dollar behavior.

Daily Economic News - Mar 26, 2008

The Greenback continued its bearish trend once again yesterday amidst surprisingly poor economic data. Selling of the dollar could have been forecasted, but was still expected to come much later on this week, if at all. Instead, a batch of unexpectedly bad figures from the US sent the dollar spiraling back down against a majority of its most traded currencies, notably the EUR which pushed itself back over 1.56. The big surprise yesterday, was the return of Consumer Confidence numbers. Initially expected to drop only a couple points from its previous figure of 76.4, Consumer Confidence dropped to 64.5 the lowest it has been for over 5 years. As if that wasn't enough to deter pro-dollar investors, the housing market is officially stuck in its worst slide since the 1980's. Housing prices in the US fell by just under 11% in January, bringing the index to its lowest point since the figure's inception in 1987. The problems in the US look to be growing rapidly once again. Consumer Confidence being so low gives investors the grim outlook of the near future of the US economy, as the US consumer is still considered the worlds strongest. However, the housing slump is far more hurtful to the overall economic outlook. Poor employment, rising retail prices and the deteriorating existing homes market has left the Federal Reserve in the precarious position of possibly having to tweak interest rates once again. Investors should feel somewhat hopeful about the long term state of the US economy, as last week's 75bp cut of the interest rate by the Fed did help stifle credit worries for banks. Still, it is a crap shoot at this point as to when a significant turn around in the US economy will come. The NY Times reported earlier this week that they expect another 20,000 job cuts to come from the lucrative financial sector which should contribute to more bearish behavior by the greenback. Today the economic calendar is packed with a batch of data, as this could be a defining day for the Dollar. Core Durable Goods Orders, Durable Goods Orders, New Home Sales and Crude Oil Inventories are all expected today. An important figure in preventing more of the bearish trend of the USD would be steady rise in Durable Goods. The figure is expected to improve and should help ease some tension in the US market. New Home Sales is expecting a slight drop, and we should hope it will only be slight, as any more negative news from the Housing sector can lead to major issues for the greenback. These figures will be accompanied by Treasury Secretary Paulson and Dallas Fed President Fisher scheduled to make speeches today, which will likely touch upon the growing concern of Consumer Confidence. Expect the greenback to continue its bearish trend today, unless we see surprisingly positive results from US data.

Daily Economic News - Mar 25, 2008

Yesterday's trading session was characterized by low liquidity as US markets were closed due to the Easter holiday. The greenback was consolidating yesterday against most currencies and showed no distinct trending. The calm status changes later on the overnight trading session as the greenback started to gain all across the board in a quite aggressive manner probably due to speculation that the Fed will continue to ease interest rates in order to try and salvage the ruins of the US economy. "There are a variety of reasons for the dollar's general weakness. The major ones are the bearish outlook on the economy and expectations of more rate cuts. The Fed may cut rates by half a percentage point next month and another quarter point in June said the head of economic strategy of Bank of America. Despite the unexpected rise in existing home sales of 2.9% which was the biggest jump in a year, the greenback continued to linger in bear territory. As for today, there are two major events expected to come from the US. The first is the Yearly National HPI Composite index which measures the annual change in the average price of a single-family home in 20 metropolitan areas. And is expected at 13:00 GMT The index is expected to be released at -10.5% and has a previous figure of -9.1%. A bit later at 14:00 GMT, the Consumer Confidence is expected to be released with a forecast of 73.5 which is slightly lower than last month's release of 75.00. The expectations for weak US data will most probably help to push the greenback further down, and it appears that the short breath of fresh air which caused the greenback to gain against most currencies is probably over.

Daily Economic News - Mar 24, 2008

Last week, the greenback recovered against all of the major currencies. The USD touched a two week record against the EUR and finished Friday's session close to the key psychological support level of 1.54 USD. The greenback appreciated generously against the JPY as it added 3.1% to its value from the previous week of trading. The cable (GBP/USD), also had its turn to feel the dollar bullishness as the pair depreciated 2.7% from the starting rate from one week ago. The Greenback recovered mainly as a result of the Federal Reserve's act of cutting the key interest by 0.75% despite analyst's expectations of a slightly more aggressive cut. Interestingly enough there were some members of the FOMC board who voted for a less aggressive cut than the one which resulted in the new "slim" 2.25% rate, which gave the investing public an alternative picture of the US economy; one that might not be in as much trouble as initially forecasted. Surely, with the horrid state of the housing and credit markets in the US in the recent future, any bullish behavior from the Dollar is welcomed with open arms. More surprising than the change in the greenback trend was the rate at which it occurred. The currency essentially erased three weeks of significant losses in just over 4 days of trading, proving once again that investors still have some belief in the American juggernaut. The greenback boom was also boosted by the release of many other positive figures last week. The TIC Net Long-Term Transactions report of Monday came back at a 9% improvement from last month at 62B. Also the monthly Philadelphia Fed Manufacturing Index showed a good improvement from last month and the CPI did not disappoint forecasters. Those and other positive figures released indicate a serious improvement in the biggest economy in the world. It could be the Fed's interruption which began last month, it could be the sweet positive silence before the volatile storm to come as recessionary expectations still linger, but one thing is almost certain, positive indicators will continue to push the USD up for the short term. Looking ahead, US Existing Home Sales is due to be released today at 14:00 GMT to a small drop from last years figure. Today's trading is expected to stay calm as a result of the Easter holiday.

Daily Economic News - Mar 21, 2008

Yesterday, the greenback continued its sharp bearish turn, in what has been a wild week for world economies. Separated less than one week from all time lows against a basket of currencies, the greenback has made a push in the last few days, most notably versus the EUR. Taking into account that the EUR suffered from a good deal of in house issues, the dollar's 200 pip rise versus the 15- Nation currency, could be just what is needed to bring some calm to the US market. Data released from the US was mixed yesterday, as we saw a 22K rise in Unemployment Claims to 378K in February, and at the same point, a rise in the Philadelphia Fed Manufacturing Index. Still, it seems that after several tries, Fed Chairman Ben Bernanke finally got it right with the Interest Rate Cut. Since the March 18th cut the greenback has gained against major world currencies and looks prime to continue in this gradual bullish trend. Another clear indication of the dollar revival is the tumbling of commodities prices traded in the Forex market. Gold and Crude Oil have both eased, after hitting very high rates over the last few weeks. A large part of the drop in the commodities can also be attributed to the sell-off of positions held by traders who collected high profits over the last period. Today, the US Markets are closed in observance of Good Friday, and we should expect little liquidity and volatility as a result. Looking ahead to next week, we expect a resumption of the normal US calendar as a set of significant economic data is to be released in the US. Non- Farm payrolls, new home sales, consumer confidence, and ISM manufacturing figures are all expected to shape what should be an interesting week. The dilemma will be whether or not this late week push will be continued on into next week or if negative US data will once again resume dollar woes.

Daily Economic News - Mar 19, 2008

Yesterday, the greenback rose all across the board after that the Federal Open Market Committee (FOMC) voted to lower the US Interest rate by 75 pts to 2.25%. The Fed announcement, which returned below the expected 100 point cut, set the USD on a bullish run as it appreciated against most of the major traded currencies particularly the EUR/USD pair which dropped close to 150 pips. The FOMC decision came as a last hope to help the US economy and the greenback recover from what has looked to be recessionary behavior. Following the announcement, Philadelphia Fed President Charles Plosser made it public that he voted against the 75pt cut as he preferred less aggressive action at the Fed meeting. Investors felt a boost of confindence yesterday in regard to the severity of the financial difficulties in the US, as the combination of the lower cut and general objections by some of the board, may indicate that the economic outlook is not as bad as once expected. It certainly seems that the USD and the US economy have recovered from what had been some of its worst results since 1945. Yesterday also saw the release of PPI figures as they rose 0.3% in February following a 1% increase in January. Core inflation rose 0.5% for the month, the largest gain since November 2006. The extremely high inflation in the US has increased speculations and worries that the country is heading toward a period of stagflation, a period characterized by economic slowdown and a rise in inflation. Another result of the 75pt cut yesterday was a sell-off on commodities. Gold and Oil prices depreciated yesterday after trading in and around all time highs last week. Gold lost $35 per ounce roughly 3.2% down from the day before and closed the trading session at a rate of 986.50. Crude Oil lost almost $5 per barrel losing 4.1% from its Monday value. Today the US is absent from any significant scheduled news events, as Crude Oil Inventories are the only news in tap, and should not contribute to volatility. Forex traders should follow indicators coming from the Euro zone, the United Kingdom and Japan.

Daily Economic News - Mar 18, 2008

During the initial phase of yesterday's trading session the greenback collapsed to a 12 year low against the JPY and it also reached record lows against the EUR and the CHF. The main reason for the initial dollar slide was the fact that the emergency liquidity-boosting measures by the Federal Reserve over the weekend failed to ease worries about the U.S. financial system. The Fed lowered the discount rate, which is the rate that U.S banks are charged when borrowing directly from the central bank, from 3.50% to 3.25%. Therefore investors sold the dollar in reaction to this move by the Fed which was also accompanied by the news that the U.S investment bank Bear Stearns needed emergency financing. At the beginning of the Asian trading session there were major concerns surrounding the U.S banking system which reignited risk aversion. Later, during the U.S trading session there was a flow of key U.S data releases. The Empire State Business Conditions, Industrial Production and Capacity Utilization Rate figures all released lower than expected, which did not help the greenback's cause. However the greenback did manage to find some support as the U.S Current Account and the TIC report surprised on the upside releasing at -173B and 62.0B, respectively. The greenback managed to pullback some lost ground as the nervousness in the market is starting to abate and the focus is now turning to today's FOMC meeting and the possibility of a 1.00% rate cut. If the Fed lowers the Federal funds rate by 1.00% then the greenback might depreciate sharply all across the board. In addition the JPY and CHF crosses should tumble on the back of such an aggressive Fed cut as it will fuel risk aversion and result in a sharp carry trade unwind. Looking ahead, any significant news released from the U.S today will be overshadowed by the Fed Interest Rate Statement. The market is expecting a 0.75% rate cut, from 3.00% to 2.25%. However many analysts predict a 1.00% rate cut as the Fed will give a last ditch attempt to avoid recession and provide relief for the credit crisis. Volatility and liquidity should decrease today leading up to the rate cut as traders will exercise caution. If the rate cut releases inline with expectations then the greenback may consolidate slightly before resuming its bearish movement.

Daily Economic News - Mar 17, 2008

The greenback continued its downward slide on Friday on the back of weaker than expected CPI figures. The core and headline CPI figures released at 0.0%, indicating that consumer inflation is on the decline despite the recent spate of Fed interest rate cuts. This is very problematic for the U.S economy as the Fed rate cuts are supposed to stimulate the economy and raise inflation. Now although Consumer Sentiment released slightly better than expected it was still not enough to noticeably bolster consumer spending, as indicated by falling CPI figures. However the main devastating news for the greenback on Friday was the announcement that the U.S investment bank Bear Sterns was forced to secure emergency financing from J.P Morgan and the Fed. The dollar fell to below 100 against the JPY and it hit another record low versus the EUR on the back of this news, since the collapse of Bear Sterns indicated more credit upheaval in the future and it raised recession concerns. However the dollar woes did not end on Friday as yesterday the Federal Reserve lowered the Discount Rate to 3.25%, from 3.50%. The Discount Rate is the interest rate charged to banks for borrowing short-term funds directly from the central bank. The outlook for the greenback is expected to get bleaker as the FOMC is expected to meet on Tuesday and will almost certainly cut the Federal Funds Rate by between 0.50% and 1.00%. All eyes will now shift towards the FOMC meeting on Tuesday and if the Fed lowers rates by more than 0.50% than the greenback will go on another record breaking freefall. In the meantime, there will be a host of key U.S data releases today. The most significant news release will be the TIC Report, which measures the monthly difference in cross-border foreign and domestic purchases of long-term securities. This figure is expected to release better than last months figure of 56.5B, at 60.0B. The other key data today will be the Empire State Business Conditions and the U.S Current Account, both figures are expected to disappoint. The Greenback should stay in grizzly bear mode until after the FOMC meeting on Tuesday and in the highly unlikely situation that today's data surprises on the upside, the USD may find some consolidation.

Daily Economic News - Mar 14, 2008

On Thursday the U.S. dollar dropped to a 12-year low versus the JPY and to a record low versus the 15-nation European currency influenced by uncertainty about the long-term impact of the Federal Reserve's efforts to ease strained credit and money markets. The dollar extended losses after U.S. retail sales fell in February by more than expected, boosting worries about a U.S. recession. The report reiterated how the housing slump is filtering through the economy. Purchases of furniture, electronics and building materials all dropped. A separate report from the Labor Department showed further gloomy data, as the number of unemployed who remain on jobless aid stood at the highest level in nearly two and a half years. Oil rose to a fresh record high, above $110 a barrel, hitting new peaks for the seventh trading day as a weak dollar overshadowed an increase in U.S Crude Oil Inventories. The dollar's slide came despite remarks from U.S. President George W. Bush on Wednesday that he would like to see a stronger dollar and expressed concern that its falling value was one of the causes of soaring U.S. energy prices. Due to fewer jobs, rising fuel costs and falling property value will continue to push the economy closer to a recession. Despite all the pain the U.S. economy suffered during this week, we truly believe that the greenback will still have to decrease further before seeing any sort of relief. However if next week the Fed cuts the interest rate by 0.5% only, then we may see a sharp dollar rebound.

Daily Economic News - Mar 13, 2008

The greenback slipped across the board yesterday against most of the major currencies. The USD breached new all time lows against the EUR at the rate of 1.5572. The greenback depreciation comes as a result of investor worries of recession in the US economy. Investor wariness has a lot to do with negative indicators from the US economy that have consistently driven the greenback further and further down versus its major competitors. Another undeniable attribute to dollar deprecation comes from positive data from the Euro-Zone. Yesterday, Crude Oil Inventories was released by the Energy Information Administration. This leading indicator measures the weekly increase in barrels of commercial crude oil held in inventory by US firms. Crude-Oil Inventories rose by 6.2 million barrels (2%) to 311.6 last week after an unexpected drop last week. As a result of this report's release the Crude Oil prices appreciated sharply and breached a new all time record of more than 110 USD per barrel. This was the only scheduled economic news released from the US yesterday. Today we expect several key figures to be released from the US. Core Retail Sales is forecasted at a 0.2% drop from last month. Unemployment Claims is also on tap today and is expected to show a slight increase. Closing out the scheduled US news day is the 14:00 GMT release of Business Inventories, which is expected to show a 0.5% increase in inventories. The question then becomes, whether or not such an increase is actually positive data? One way to look at it could be that retailers are restocking on the back of the still purchase happy American consumer. On the other hand, inventories could be rising due to a lack of purchases by the same consumer base. Nonetheless, the US economy and its faithful dollar, are still stuck in an epic bearish trend, and currently see no signs of change in the immediate future. Investors will have to come to the new reality that the days of instant dollar recovery from a bad day of news are over. Going long against the dollar is still a lucrative option.

Daily Economic News - Mar 12, 2008

The greenback rose all across the board yesterday after the Fed announced new methods to inject liquidity into the financial markets. The US Federal Reserve, European Central Bank, Bank of England, Swiss National Bank and the Bank of Canada all announced provisions of additional liquidity in an attempt to once again shore up confidence in the money markets . The greenback drew comfort from this announcement because the Fed's acceptance of mortgage-backed securities could ease some of the problems in the US mortgage market and therefore reduce the risk of a severe US recession. This news also led to speculation that the Fed is more likely to cut the interest by 0.50% next week, instead of the more aggressive 0.75% which was expected previously. Therefore the market reacted to the lower probability of an aggressive move by the Fed next week and risk appetite was partially restored among investors causing the dollar to soar against the low yielding JPY. The greenback also managed to reverse the EUR's bullish surge, gaining back a lot of lost ground. There was more positive news for the greenback yesterday as the U.S Trade deficit increased to $58.2 B, instead of the forecasted $59.5 B. This gave investors another strong indication that the weak dollar is managing to significantly boost exports, which will in-turn stimulate growth. Many analysts believe that yesterday's dollar rally will be short lived as the market will come to the realization that the Fed's new measurement of liquidity injection does not solve the problems of the of a weak housing market, a capital deficient financial system and deteriorating corporate credit quality. U.S stocks also surged yesterday as the DJIA gained almost 300 points after the Fed said it will expand its securities lending program to loan up to $200 billion Treasury securities under a new Term Securities Lending Facility. Looking ahead to today, the only significant news expected from the U.S will be Crude Oil Inventories which measures the weekly increase in barrels of commercial crude oil held in inventory by U.S firms. At the moment crude oil is trading near all time highs so investors will be closely monitoring this data because the level of inventories influences the price of petroleum products, which can have an impact on inflation and other economic forces. Today the greenback may give up some of its gains as the market digests yesterday's Fed announcement. However the greenback may rally again leading up too next week's rate cut as the market is now expecting less aggressiveness from the Fed.

Daily Economic News - Mar 11, 2008

The greenback slipped lower against the JPY yesterday as U.S stocks tumbled on the back of heightened recession speculation. Therefore carry trades continued their sharp unwind as “riskier” positions were pared off by investors. However the greenback did manage to consolidate nearly all across the board today, in particular against the EUR on the back of comments from President Trichet that the ECB is concerned about the recent exchange rate volatility. Nevertheless, despite the greenback's slight recovery today most analysts believe that it will continue its bearish path, at least over the next few months. Investors are now ready for another rate cut by the Fed after the recent string of negative U.S economic data which was topped off on Friday by the surprisingly weak NFP report. With the constantly increasing recession fears it also now seems likely that the Fed could make another emergency rate cut ahead of its next scheduled meeting on March 18th. If this occurs, then we will see the greenback fall much steeper far quicker than anticipated. Yesterday there was no real market moving news released from the U.S economy and the dollar movement was mainly EUR news related. Looking ahead to today, we expect the U.S Trade Balance and a speech from Fed Governor Kroszner. The U.S Trade Balance, which measures the difference in value between imported and exported goods and services, is forecasted to release lower than last month at -59.5B. However this figure is likely to surprise on the upside as the recent sharp deprecation of the greenback should have boosted U.S exports but there may be a lagging effect. If the Trade Balance comes out strong today then the greenback should be able to sustain yesterday's consolidation and it may even trigger a rally. However the near term outlook for the greenback remains dismal in particular with the potential for upcoming Fed rate cuts. In addition the relentless stream of weak U.S data should keep the U.S currency on its back foot.

Daily Economic News - Mar 10, 2008

The greenback started the new week in similar fashion to how it has traded in recent history; at a steady loss. The US currency opened Sunday to night see an almost immediate fall versus a basket of major currency pairs, namely the JPY and EUR. First the dollar came dangerously close to record lows versus the JPY as the pair floated around the 102 key level, whilst the EUR used the opening session to push the USD to the 1.54 key level. Much of the cause for concern comes as investors bet on the Federal Reserve cutting interest rates by up to 1 percentage point. While the credit woes and the failing housing market have become the noticeable thorn in the side of the US economy, it is the retail sector and consumer confidence index which is contributing to this latest round of fears surrounding the dollar. As salaries are slowly dropping, the usually robust consumer market in the US has faltered as the purchasing power of the everyday American has been limited due to the lack of available credit and rising prices for goods. The trend does not seem to be changing soon, as even positive data has produced nothing more than small rallies by the greenback. Futures on the Chicago Trading Board now show almost a 95% chance that the interest rate in the states will be dropped by roughly 75bp to 2%. The big news of the week will likely be the worries regarding the Fed, and whether or not they have the financial means to "address liquidity pressures in the funding markets.” say certain board members. As plans call for 200 million dollars of infusion into the failing bank system, many investors believe the US economy is in the unfamiliar territory of insurmountable losses, and that Fed intervention will not suffice in pulling the US out of the mess it is in. Generally, when discussing a nation with a vast economic makeup, it can fall back on several sectors to ease pressures. In this specific case with the dollar, additional economic sectors continue to add to overall disappointment, leaving no leeway for the dollar to post any significant gains. The week ahead, will provide a host of key economic calendar events for the USD. Core CPI, Consumer Sentiment, Retail Sales, Unemployment Claims, and the Trade Balance, highlight the week's events. While some of the data is expected to come back dollar positive it is very hard to imagine a real big rally by the dollar, as many investors are convinced the recessionary behavior in the US is not temporary and will continue to hurt the overall value of the dollar. Today, the US is absent from the economic calendar. Look for the dollar to range trade above the 1.5350 level as we await the docket of US news events.

Daily Economic News - Mar 06, 2008

The greenback continued to experience losses yesterday, as the US currency could not rebound even amidst positive economic data. The release of surprisingly positive ISM service sector data had some investors convinced that the dollar would rise; instead it floated dangerously low versus a basket of major currencies. Most notably, was another record low versus the EUR as the major pair hit the 1.53 key level, spurring investors into even more aggressive bearish behavior regarding the dollar. ISM Non-Manufacturing Composite and Activity data is a measure of the activity within the service sector of the US. Though yesterday's figures did produce positive results, (composite data rose to 49.3 from 44.6 and activity data from 41.9 to 50.8) traders learned quickly that the harsh truth is that the overall economic outlook in the US is poor and recession is inevitable. The manufacturing and service sectors as a whole have suffered from the credit crisis in the US, experiencing one of the smallest consumption periods for some time. Unemployment is rising and can only hurt the already ailing economy. This should be a sign as to the direction of the dollar ahead of Friday's Non-Farm Payrolls, which is one of the more important figures to be released on the US calendar. Today, as we prepare for tomorrow's end of week news events, we will have a relatively quiet news day from the US. Unemployment Claims and Pending New Home Sales are the only significant events on the schedule, and will likely not be enough to reverse the bearish trend of the greenback, assuming the figures return on a positive note. The assumption according to historical evidence is that we should expect a big loss in the Non-Farm payroll tomorrow, as it has had similar results to ISM figures released in the past. Investors should look for more drops in the dollar price as there does not seem to be anything that prevents the detrimental fall of the greenback.

Daily Economic News - Mar 05, 2008

Yesterday the greenback remained range bound against the EUR and the GBP, failing to breach new lows. However the greenback did lose some ground against the JPY and the CHF after Fed Chairman Bernanke painted a gloomy picture of the struggling U.S housing sector in his speech yesterday. He mentioned that mortgage foreclosures are likely to remain on the increase coupled with falling home prices and therefore an active policy will be needed by the Fed in order to provide this failing sector with some stability. These comments added to the rising fears of a recession in the U.S and there are already some key investors such as Warren Buffet who believe that the U.S economy has already crossed that line. Yesterday was a day full of speeches by key U.S Fed Officials which included Fed Governor Mishkin and Dallas Fed President Fisher. Mishkin's comments were still in accordance with the majority opinion in the Fed, which is that growth is the main concern with inflation expected to ease in the medium term. On the other hand Fisher continued on his one man crusade against inflation in the US, saying that slower growth was preferable to higher inflation. These comments however did not really manage to cause any significant volatility. Looking ahead, the main news from the U.S today will be the ADP report which is forecasted to release at 10K, significantly lower than last months figure of 126K. This figure has some predictive value with regards to Friday's key NFP report and it should cause some volatility. However traders' main focus is Friday's NFP report and this will cause a heightened level of caution, so investors will be hesitant to drop the greenback any lower ahead of Friday, unless the ADP springs a major surprise. The longer term picture remains gloomy for the greenback as the poor U.S. economic outlook will keep the Fed on its interest rate slashing path.

Daily Economic News - Mar 04, 2008

Yesterday, escalating fears of a recession in the U.S., hammered global stocks and sent the USD to record lows against the EUR for the 5th consecutive day. The greenback's drop to an all time low yesterday came after the ISM Manufacturing report showed that U.S. manufacturing diminished for the second time in 3 months. The ISM index, which measures the activity level of purchasing managers in the manufacturing sector, dropped to 48.3 in February from 50.7 in January. This unfortunately, is not the only trace of the U.S. economic slowdown, as all signs continue to hint that the economy is slipping into a 'mild' recession. HSBC yesterday, announced huge losses, due to credit issues, as they reiterated the uncertain future of the US economy in their official statement. The Housing Crisis is having an impact on the broader economic picture, and the ramifications could be disastrous for the future. Declining Home Constructions are already dragging on growth, undermining consumer spending, which accounts for two-thirds of the economy. Americans are in the precarious position of feeling less wealthy and in turn buying fewer goods. Such an economic environment provides a heavy burden on the U.S. currency, keeping it where it is now, floating around record lows. Fed Chairman Ben S. Bernanke recently stressed that the Fed will not hesitate to ease rates further if the economic outlook deteriorates. Now, traders are betting that the Fed will be forced to reduce its benchmark interest rate by 0.75% at its March 18 meeting. During the following days, these bets will most likely be priced in by the market and we might see the greenback stabilizing ahead of the FOMC Interest Rate announcement in 2 weeks. As for today, there is not much on the U.S. economic calendar. Fed officials Bernanke, Fisher and Mishkin, all are expected to deliver speeches on economic issues during different events today. Traders may expect another weak USD trading session. It is likely; the greenback will stay low and continue to deteriorate on expected positive European data.

Daily Economic News - Mar 03, 2008

The dollar began the new week in similar fashion to the way in which it closed last week; falling against most of it major currency rivals. Investors will now have to get used to the notion that the 1.50 key level for EUR/USD has been broken and will continue to rise. The major currency pair is currently above 1.5150 and looks to be set in its bullish trend, as data from the US continues to disappoint. The latest scare comes on investor worries regarding additional losses from banks that are under pressure from the subprime mortgage market. The housing and credit crisis has not subsided and is pushing investors away from the greenback. The EUR is not the only currency to see record highs lately versus the dollar. Amongst a basket of common currencies that are seeing gains against the greenback, the JPY is the most notable. Currently floating around 103, the USD/JPY has plummeted to three year lows, and is growing ever closer to the key support level of 100. This week is jam packed with important economic data from all over the world. The US will have its share of important data as we expect figures from Nonfarm Employment Change, Unemployment Rate, ADP Nonfarm Employment Change, Non Manufacturing ISM, Factory Orders, and Pending Home Sales. These events will be preceded by today's 15:00 GMT release of ISM Manufacturing Prices and Index. Expectations are understandably low, as are most of the forecasts for US data in the coming week. The week's economic data will be coupled with a long list of speeches by important economic policy makers in the US, as the likelihood of more Fed intervention is gaining steam. The contrasting views amongst the economic elite in the US are only contributing to the lack of confidence investors currently have in the dollar. Look toward Tuesday' remarks by Fed Chairman Ben Bernanke to get a good sense of the US monetary outlook. As data in the US does not look positive for the near future, expect the greenback to continue its epic slide.