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Dollar Traded Mixed Despite Obama's Speech

Written by article default Wednesday, 17 August 2011 16:23

Technical Analysis

USD Dollar (USD) – In forex trading, the U.S. Dollar traded mixed against most of the major currencies despite positive economic data and optimistic speech of US President Barack Obama. Obama told an audience in rural Iowa that the U.S. economy will come back “stronger than before” after the worst recession in decades, as he sought to regain the initiative on the economic debate. Obama said the recovery must be led by small businesses and entrepreneurs and “isn’t going to be driven by Washington.” In addition, Industrial Production in the U.S. climbed last month by 0.9 percent, the most this year. The Stock markets closed negative after three days of gains as the Dow Jones fell by 0.67% and the NASDAQ lost 1.24%. The main reason is high concern that the European debt crisis may worsen. Crude oil fell by 0.90% and closed at $87.00 a barrel. Gold (XAU) strengthened by 1.70% and closed at $1,786 an ounce, as the sagging European economy spurred demand for the precious metal as an investment haven. Today, PPI m/m is expected to show unchanged vs. -0.40% previously and Crude Oil Inventories are expected to fall by -0.40M vs. -5.2M previously.

Euro (EUR) – The Euro fell against the U.S. Dollar after German and French leaders rejected the issuance of bonds by the European currency region to contain its sovereign-debt crisis. German leader, Merkel said "I don’t think Europe has used its last resource yet, and I don’t think we can resolve the problem with a single big-bang policy”. In addition, the German GDP, adjusted for seasonal effects, grew 0.20% vs. 0.30% forecast. Trading above the support level of 1.4380 will keep the momentum positive for the pair. Overall, the EUR/USD traded with a low of 1.4351 and with a high of 1.4476. Today, the CPI y/y is expected to grow by 2.5% and the Core CPI y/y is expected to grow by 1.7% vs. 1.6% previously.

EUR/USD – Last: 1.4390

British Pound (GBP) – The Pound strengthened against the greenback after a report showed U.K. inflation accelerated more than economists forecast, reducing the likelihood the Central Bank will inject further monetary stimulus into the economy. The trend for the pair remains bullish if the pair maintains its support level of 1.6350, but if the pair breaks that support level, it may reach 1.6150. Overall, the GBP/USD traded with a low of 1.6317 and with a high of 1.6476. Today, the Claimant Count Change is expected to be at 20.1K vs. 24.5K previously and the MPC Meeting Minutes are due to be released.

GBP/USD - Last: 1.6430

Japanese Yen (JPY) – The Yen continued to fluctuate against the US Dollar after Japan indicated that it’s ready to intervene in foreign exchange markets again. The USD/JPY has been struggling between the 76.50 - 76.90 levels. As long as the pair is trading below 77.10, the Yen is more attractive. A short position is preferred if the pair breaks below the 76.30 level. Overall, the USD/JPY pair traded with a low of 76.59 and with a high of 77.09. No economic data is expected today.

USD/JPY-Last: 77.70

Canadian dollar (CAD) – The Canadian Dollar fell against its U.S. counterpart due to a decline in oil prices. In addition, the Manufacturing Sales came out worse than expected after showing a decline of -1.50% vs. -0.30% forecast. The trend for the pair will be bullish if the pair maintains its support level of 0.9820. Today, the Foreign Securities Purchases are expected to grow by 10.33B vs. 15.40B previously.

USD/CAD - Last: 0.9820