Euro Retraces After Forming New High Against Dollar

On Wednesday, the US dollar strengthened against most other currencies including the Euro, Swiss franc, Japanese yen and British pound. The Euro broke above the crucial 1.6000 level against the dollar yesterday but it only managed to hit a high of 1.6020 before falling due to some Euro longs bailing out. EUR/USD is now trading below 1.5900. Luxembourg’s Finance Minister Jean-Claude Juncker on Wednesday again voiced his concern about the rapid decline of the USD, saying he didn’t like “the way things are developing” in the forex markets. Meanwhile, the Eurozone purchasing manager’s composite index for both manufacturing and service industries released today went up slightly to 51.9 in April from 51.8 in March, better than an expected drop to 51.5, but this data is shrugged off as the reading remained close to 50. The overall Euro uptrend seems intact, but for the bullish force to be unleashed, Euro bulls need to see much weaker US data. Major US economic data such as durable goods and new home sales will be reported on Thursday. What’s also supporting Euro at elevated levels was remarks by German Finance Minister Peer Steinbrueck who said Wednesday that the strengthening Euro has had a positive impact on German import prices.

Loonie Down On Gloomy Outlook

The Canadian dollar is sharply down against the US dollar Wednesday as a result of broad USD strength and weak Canadian February retail sales report which showed an unexpected 0.7% drop. Yesterday the BOC downgraded its economic outlook for the rest of 2008 and 2009.

Aussie Soars

The Australian dollar hit a 24-year high of 0.9540 against the dollar after consumer price data showed surging inflation in Australia, which led to traders speculating lesser chance of the RBA cutting rates.

Thursday:

German IFO 0800 GMT

UK retail sales 0830 GMT

US durable goods, initial jobless claims 1230 GMT

US new home sales 1400 GMT

Japan national CPI 2330 GMT

Posted in Categories: Economy, Forex.

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