USD Trading Outlook
U.S. Dollar Trading (USD) the mood darkened as the day went on yesterday with light selling in Asia turning into a major selloff by the end of the US session. The main factors were the FED downgrading US growth combined with China manufacturing PMI survey showing contraction and 15 global banks downgraded by Moody’s. The US economic data was mixed with weekly jobless claims at 386k vs. 383k. May Existing Home Sales at -1.5% vs. 1.1% forecast. Looking ahead, no economic data tonight from the US.
The US dollar (USD) provided mixed signals versus a basket of currencies following the Federal Open Market Committee (FOMC) statement. The Federal Reserve decided to extend its monetary stimulus via Operation Twist trying to keep the US recovery from stalling. Even though this scenario was expected by investors, there was some disappointment as many anticipated a more aggressive stance towards the economic challenges.
U.S. Dollar Trading (USD) the market changed direction again overnight as Eurozone debt auctions saw positive demand and Yields dropped in Spanish and Greek 10yr yields. The EUR/USD surged back to 1.2700 and was supported on rumors a bailout for Spain being discussed at the G20. Later this was denied by German officials but the market held most gains. Another large story helping US stock markets rally was growing belief the FED will do something at tomorrows FOMC meeting. Looking ahead, FOMC Meeting Statement forecast to hold rates at 0.25%. Press Conference also afterwards.
U.S. Dollar Trading (USD) the positive feel for the EUR/USD after the Greek elections failed to hold even the European trading session as Spanish Debt continued to trade above the key 7% level. The 7% level is seen a rate that countries can no longer finance government debt at a sustainable pace. The G20 meetings and have offered token amounts to increase the IMF warchest but markets are looking for the ECB to provide real short term support. Looking ahead, May Housing starts are forecast at 0.72mn vs. 0.717mn previously. Also May Building permits forecast at 0.728mn vs. 0.723mn previously. G20 meetings also continuing today.
U.S. Dollar Trading (USD) the USD is under pressure at the open on Monday with the Greece elections looking like the Pro Euro and Austerity party had the most votes and first chance to make a coalition government. The situation is still unresolved though and markets will be watching closely new developments. Asian stocks are higher and the EUR/USD opened above 1.2700 although some profit taking has been seen already. Looking ahead, G20 meetings start today in Mexico.
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