US Dollar strength continues
The foreign exchange markets continued to be pro-USD as it sent the greenback higher against every major currency except for the Japanese Yen. With nothing meaningful to latch onto, the Yen staged another impressive rally while GBP continued to sell-off.
Jobless claims increased by 325k after remaining below 300k for the past 2 weeks while existing home sales dropped for the first time in 3 months. These disappointments still represent adjustments rather than negative implications for the US economy.
Today we have the most important piece of US data this week, durable goods orders for the month of December. Demand is expected to have been strong thanks to a big increase in aircraft and machinery orders. Unlike existing home sales, new home sales are projected to rise in the month of December, which would confirm that the housing market remains stable.
Although durable goods are important, any surprise may still not be significant enough to take the EUR/USD out of its 200 point trading range. However the chance of a breakout next week may be very strong as the economic calendar heats up.
GBP extended its losses against both the Euro and USD despite the lack of any meaningful economic data. The market is still reeling off from the surprise voting record at the most recent monetary policy meeting. Looking ahead, the GBP’s weakness against the USD is nearing support.
Whether this level will hold may be determined by the housing data due out today in the US. With BoE policy still in focus, further signs of weakness in the housing market could be cause for concern.
Mortgage approvals are expected to drop by a whopping 12.6 percent in the month of December. If this large drop is confirmed, further weakness in GBP could be seen.
The Euro has tumbled against the USD on the back of disappointing economic data. The potential impact of the 3 percent increase in Germany’s value added tax has been a major concern for all market watchers. When the German business confidence index hit a 16 year high last month, that concern was alleviated significantly.
However the latest pullback in both business and consumer confidence raises the question of whether the economy is no longer immune to the tax increase. Originally expected to rise, the January IFO index dropped from 108.7 to 107.9. In the grand scheme of things, business confidence still remains at healthy levels and for the time being is not expected to deter the European Central bank from lifting interest rates in the first quarter.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Jobless claims increased by 325k after remaining below 300k for the past 2 weeks while existing home sales dropped for the first time in 3 months. These disappointments still represent adjustments rather than negative implications for the US economy.
Today we have the most important piece of US data this week, durable goods orders for the month of December. Demand is expected to have been strong thanks to a big increase in aircraft and machinery orders. Unlike existing home sales, new home sales are projected to rise in the month of December, which would confirm that the housing market remains stable.
Although durable goods are important, any surprise may still not be significant enough to take the EUR/USD out of its 200 point trading range. However the chance of a breakout next week may be very strong as the economic calendar heats up.
GBP extended its losses against both the Euro and USD despite the lack of any meaningful economic data. The market is still reeling off from the surprise voting record at the most recent monetary policy meeting. Looking ahead, the GBP’s weakness against the USD is nearing support.
Whether this level will hold may be determined by the housing data due out today in the US. With BoE policy still in focus, further signs of weakness in the housing market could be cause for concern.
Mortgage approvals are expected to drop by a whopping 12.6 percent in the month of December. If this large drop is confirmed, further weakness in GBP could be seen.
The Euro has tumbled against the USD on the back of disappointing economic data. The potential impact of the 3 percent increase in Germany’s value added tax has been a major concern for all market watchers. When the German business confidence index hit a 16 year high last month, that concern was alleviated significantly.
However the latest pullback in both business and consumer confidence raises the question of whether the economy is no longer immune to the tax increase. Originally expected to rise, the January IFO index dropped from 108.7 to 107.9. In the grand scheme of things, business confidence still remains at healthy levels and for the time being is not expected to deter the European Central bank from lifting interest rates in the first quarter.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
posted by Wise Money @ 6:53 PM
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