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Currencies Update: Dollar dips after drop in consumer confidence
Written by article default Tuesday, 28 September 2010 13:31
The dollar slipped against a basket of major after the release of a US report showing that consumer confidence fell to the lowest level in seven months.Consumer confidence plunged to 48.5 in September compare to the August's reading which was revised to 53.2 and median estimates of 52.1.
The grim report added to concerns that recovery is faltering and pumping more money by the Fed may take place soon.
The dollar index, which tracks the dollar movements versus a basket of major currencies, plummeted to a low of 79.03 from the day's opening at 79.46.
Actually, the dollar's drop gave a boost to gold which jumped to a new fresh high of $1307.30 an ounce while oil climbed to $76.45 a barrel from the day's opening at $76.15.
On the other hand, the euro advanced against the dollar after the news which offset the debt concerns in the region that sparked with the rise in credit-default swaps on Ireland, the cost of insuring against the default on European government debt, to 30.5 basis points to 519, while for Portugal it jumped 12.5 basis points to 442.5.
Concerning the euro-dollar pair, it rose to continue its third consecutive weekly advance after the breach of critical level at 1.3500 which actually represents 50% Fibonacci retracement to the downside fall that started since December last year.
Now, the pair is trading at 1.3542 after recording a high of 1.3551 and a low of 1.3379, while the trading range for today is among the key support at 1.3200 and the key resistance at 1.3495.
Moving to the sterling-dollar pair, it fell for the first time in five sessions after announcements by BoE's Posen who mentioned that the Central bank should buy more assets to enhance growth amid the sluggishness reported in the second half data.
The royal pair is currently trading in an overbought area as depicted by the Stochastic Oscillator momentum indicator which is giving bearish signal.
Meanwhile, the pair is trading at 1.5800 after falling from a high of 1.5894 to a low of 1.5716, whereas the trading range for today is among the key support at 84.00 and the key resistance at 87.00.
With regard to the dollar-yen pair, it is moving south to continue trading in overbought area as depicted by momentum indicators where the pair pared more than half of the rise the took place after the BoJ's intervention on September 15.
So far, the pair is trading at 83.90, recording a high of 83.34 and a low of 83.79, whereas the trading range for today is among the key support at 84.00 and the key resistance at 87.00.