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Dollar Reduces Gains After Soft Housing And Sentiment Data
By Grace Cheng on May 27, 2008 | More Posts By Grace Cheng | Author's Website
An avalanche of economic data was released today from both the Eurozone and the US, and the US dollar has been stronger across the board. The greenback is up against the Euro, Swiss franc, British pound, Japanese yen, Canadian dollar and Australian dollar. Euro weakness was more pronounced during the European trading session after it was reported that French business confidence weakened sharply in May to its lowest level since December 2005. Business confidence in France weakened to 102 in May from 106 in April. UK data showed that CBI services sector confidence fell sharply in the last three months.
Dollar’s gain today could have been the result of a short squeeze. In the US trading session, USD strength gradually eased due to weaker-than-expected US new home sales and consumer confidence data.
Poor Housing Data To Shadow Glimmer Of Hope Or Vice Versa?
US new home sales rose in April, the first gain since October, but was less than expected as the previous month’s sales were revised downward by the Commerce Department. Sales of single-family homes rose 3.3% last month to a seasonally adjusted annual rate of 526,000 (533,000 expected). Of course, that’s some improvement from the revised 11% drop in March to an annual rate to 509,000 (was originally an 8.5% drop to 526,000). However, if you compare the figures to a year ago, that’s a drop of 42% - the biggest year-over-year fall in nearly 27 years. The superlatives don’t just end there: According to the S&P/Case-Shiller national home price index also released Tuesday, prices of US single-family homes in 20 metropolitan areas fell a record 14.1% in the first quarter from a year earlier, marking a pace five times faster than the last housing recession.
US Consumer Sentiment
That’s still not all for today. US confidence confidence fell more than forecast to 57.2 (60 expected), the lowest level since October 1992, from a revised 62.8 in April. 33.6% of consumers expect business conditions to worsen in next 6 months, up from 27.4% in April.
Forex Trading
EUR/USD rose to an intraday high around 1.5820, but then bounced all the way down to 1.5700, and 1.5670-1.5700 is the immediate zone of support. USD/CHF’s nearest support is around 1.0200, and nearest resistance around 1.0350-60. GBP/USD’s support lies around 1.9680-1.9700.
Wednesday:
German CPI - tentative timing
Eurozone current account 0800 GMT
US MBA mortgage applications 1100 GMT
US durable goods 1230 GMT
Japan retail trade 2350 GMT
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It’s probably a fake dollar rally today