UFXBank Forex News: GBP Drops Against USD on Poor Manufacturing PMI | Learn Forex | GoLearnForex.com

UFXBank Forex News: GBP Drops Against USD on Poor Manufacturing PMI

Written by article default Wednesday, 04 May 2011 13:39

USD Dollar (USD) – The dollar strengthened versus most of the major currencies as Interpol told its 188 member countries to be on “full alert” following the death of the al-Qaeda leader in Pakistan. Factory Orders rose by 3%, more than forecast in March, on increasing demand for machinery and computers that points to further gains in business spending. This is a fifth consecutive increase, after a 0.7 percent February advance. Demand from fast-growing countries like China and Brazil is spurring U.S. exports of machinery and consumer goods. There seems to be worries over retaliation terrorist attacks. In times like this, the US Dollar seems to be a safety haven for investors. On the other hand, however, we still have to remember that the Fed is expected to hold its benchmark interest rate at zero to 0.25 percent, where it’s been since December 2008, and will be until the first quarter of 2012. While a weaker dollar may signal waning confidence in the U.S., it may also help President Barack Obama reach his goal of doubling exports by 2015 and reducing unemployment. The Stock Markets closed mixed as the Dow Jones rose by 0.01% and the NASDAQ lost 0.78%.  The Nasdaq composite index is still struggling to consolidate at 10-year highs. Crude Oil fell by 2.2% and closed at $110.50   a barrel due to the Standard & Poor’s 500 Index dropping and on projections that a government report will show that U.S. crude inventories climbed. There’s a strong correlation between oil and the S&P.  Gold (XAU) fell by 0.50% and closed at $1,536 an ounce after again testing an all-time record of $1576 an ounce. After a big run, it wouldn't be surprising to see a pause or pullback from here for Gold. If the $1550 resistance level holds, the market is more likely to be in a sharp correction decline that can extend to $1518-$1520 level. Today, the ADP Non-Farm Employment Change is expected to rise by 200K vs. 201K previously. The ISM Non-Manufacturing PMI is expected to rise to 57.90 vs. 57.30 previously, and Crude Oil Inventories are expected to show a climb of 1.9M vs. 6.2M previously.

Euro (EUR) – The euro declined in Forex trading against the U.S Dollar despite the European PPI increasing by 0.70%, an unexpected acceleration to the fastest in 2 1/2 years in March, further adding to concerns that surging energy costs will feed through to consumers and prompt the European Central Bank to raise interest rates further. In addition, the ECB, which meets May 5, raised its benchmark interest rate to 1.25 percent on April 7 from a record low of 1 percent. But, due to the safe haven value of the US Dollar, the greenback got stronger. The pair is testing its resistance at 1.4900. Trading above the support level of 1.4750 keeps the momentum positive for the pair, but if the pair breaks below this support level, it might decline to 1.4550. Overall, EUR/USD traded with a low of 1.4492 and with a high of 1.4901. Today, Retail Sales are expected to rise by 0.20% vs. -0.10% previously.

EUR/USD – Last: 1.4785

British Pound (GBP) – The Pound fell against the Greenback for the second day due to poor Manufacturing PMI, which fell to a seven-month low in April, amid declining consumer confidence and falling construction orders. Policymakers will probably keep the key interest rate at a record low of 0.5 percent this week to support the recovery. In addition, Bank of England Governor King said, that high debt levels pose “massive” economic challenges that would be exacerbated by increased long-term interest rates". The trend for the pair is bearish if the pair maintains its resistance level of 1.6520. Overall, GBP/USD traded with a low of 1.6463 and with a high of 1.6742. Today, the Construction PMI is expected to come out at 55.6 vs. 56.4 previously.

GBP/USD - Last: 1.6460

Japanese Yen (JPY) – The dollar traded unchanged against the yen after the pair didn't succeed to break its strong support level of 80.70. In addition, it still remains soft amid thin market liquidity due to the Asian holiday. The trend for the pair will be bearish if the pair manages to break its support level of 80.70, and it may bring the pair to the 78.00 level. Today, Japanese banks will again be closed in observance of Greenery Day.

USD/JPY-Last: 81.00

Australian dollar (AUD) – The Australian Dollar declined against the US Dollar for a second day after the Reserve Bank of Australia left its benchmark interest rate unchanged for a fifth straight meeting, signaling that a record level for the local dollar will help contain consumer prices until late this year. In addition, the US Dollar gained momentum against commodity currencies after a weak start of the American session. Today, Building Approvals are expected to grow by 5.205 vs. -7.40% previously and Retail Sales are expected to grow by 0.60% vs. 0.50% previously.

AUD/USD - Last: 1.0800