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Housing sector in the U.S. dollar is under pressure |
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Wednesday, 18 June 2008 |
The dollar continued to decrease against the euro and on Tuesday after new data from adverse housing sector in the United States put into question expectations for a recent increase in interest rates.
New housing projects for May noted a serious decline to 975 thousand number, which is the lowest level in 17 years. This reminded investors that the risk of a deeper recession not yet over and back in the spotlight slows their fears of economic growth at the expense of the risks of growing inflation.
Bad news for the dollar came from industrial output and the U.S. last month, which fell unexpectedly by 0.2% and the current account deficit of the country surprisingly rose to 176.4 billion dollars. As a result, interest futures already reported 55 percent chance Fed to increase the basic rate by 25 basis points in August, while on Monday that chance was 90%. However, support for this scenario proved inflation data for production in the U.S., which unexpectedly increased by only 1.4% for the month.
The euro failed to register significant growth over dollars, while trading levels around 1.5530 dollars. Reason for this speech was one of the members of the board of directors of the European Central Bank - Lorenzo Bini Smadzhi who said that once an increase in interest rates by 25 basis points would be enough to bring inflation to the original targets of 2%. So he long speculation about starting a series of increases in interest rates, which in recent days supported the euro and it did much more attractive than dollars.
For the low representation of the euro yesterday and contributed data from Germany, where the index ZEW economic falling-down expectations to -52.4, far below the consensus of -42.5.
Negative moods are getting more and more than sterling after May jump in inflation to 3.3% on an annual basis, which is at its highest level since 1997 here. However, the position of English at Central Bank remains soft and aggressive action to limit inflation is not expected.
EUR / USD Close 1.5509 High 1.5550 Low 1.5459
The euro continues to gradually away from the key support level at 1.5300, which is the lower limit of the broad consolidation channel, which is the couple. Currently resistance movement appears to increase 1.5550 level, as a breakthrough in the next targets are 1.5580 and 1.5640. In downwards provide support level 1.5450 followed by 1.5350 and 1.5300 key. Bridging the last will open the potential for significant correction.
USD / JPY Close 107.91 High 108.37 Low 107.59
Consolidate the yen in narrow borders adjacent to the key resistance at 108.50, which now restricts increasing movement. Upon successful breakthrough following objectives are resistance at 110.00 and 111.20. In downwards provide support level 107.20, followed by 106.50 and 105.60.
GBP / USD Close 1.9568 High 1.9696 Low 1.9468
Trade keeps its neutral character without clear direction. Pound was pushing down from resistance at 1.9690, but once found in the bottom 1.9460, again tries to restore increasing movement to the first resistance at 1.9600. Upon successful breakthrough following objectives are the levels 1.9690 and 1.9725. In downwards provide support level 1.9500 followed by 1.9460 and 1.9400 key mid-term bottom. |
