Weak U.S. Economic Data Driving Force Behind Euro, Pound Rallies
The U.S. Dollar was crushed on Thursday by a soaring Euro
and British Pound. Economic worries pressured the Dollar all day as investors
left the greenback in favor of the currencies backed by the stronger economies.
The fact that the U.S.
is still wallowing in debt while the European and British governments talk
about austerity measures and cutting costs may have also contributed to the
weakness in the Dollar.
Because of the sharp sell-off in the Euro and Sterling earlier in the
year, some are attributing the current rally to a short-squeeze. In other
words, bearish investors are being forced out of the market not by fresh
buying, but by short-traders scrambling to get out. In this case, itâ€™s not the
weakening U.S. economy
driving traders into the Euro and Sterling,
but rather short traders paying anything to protect whatâ€™s left of their
profitable positions from the Spring.
What is clear at this time is that the U.S. economic
data continues to show weakness. In addition to the actual released figures,
economists are contributing to the weakness by downgrading U.S. growth
Less than one day after the Fed said that GDP would slow and
the jobs outlook would remain sluggish, more bearish data was released on
Thursday.Today the New York Fedâ€™s
Empire State Survey fell to 5.08, its lowest reading since December. Also the
Philadelphia Fed Manufacturing Survey declined to 5.1 in July, well below pre-report
guesses of 10.0, reaching its lowest level since August 2009.
Although industrial production posted a more than expected
gain of 0.1 percent, the core manufacturing component fell 0.4 percent, more
than expected and the first decline in four months. Finally, the third
consecutive monthly decline in producer prices renewed concerns about a
deflationary scenario developing.
This week a plethora of data along with a dovish Fed outlook
is pointing to a weaker economy which is likely to keep the pressure on the
Dollar. Interest rates are also expected to remain low for a prolonged period
of time since the latest inflation data suggests the Fed cannot move them
higher. Furthermore, there is renewed talk of new stimulus measures which will
mean more Dollars flooding the markets. All of this is prompting a call for a
weaker Dollar over the near-term. This was particularly event in the Euro and
British Pound on Thursday.
The EUR USD surged to the upside on Thursday as a
combination of weak U.S.
economic data and better than expected demand for Spainâ€™s debt triggered a sharp
breakout to the upside. Before the U.S.
markets opened, the Euro was receiving support from the news that Spain raised
nearly $3.85 billion in 15-year bonds.
Technically, todayâ€™s rally in the Euro took out a key 50%
level at 1.2783 and now appears to have enough upside momentum to challenge the
Fibonacci retracement price at 1.2998.In the best case scenario, one can project that the current upside
momentum and gloomy economic outlook for the U.S. economy is enough to drive the
Euro up to at least 50% of the entire sovereign debt break at 1.3510.
The GBP USD also soared on Thursday, putting this market in
a position to test a cluster of former tops at 1.5497 and 1.5523 on its way to
a major 50% price level at 1.5635.
The fact that U.K.
inflation is rising and U.S.
inflation is falling was enough to drive investors into the British Pound at
the expense of the Dollar. This is because the rising inflation rate is
bringing the Bank of England closer to hiking interest rates while the falling
inflation rate in the U.S.
is keeping the pressure on the Fed to keep interest rates at historically low
levels. Once again investors are going after the highest yields, prompting
strong the strong demand rally for the Sterling.
Following Wednesdayâ€™s weak assessment of the economy by the
Fed, the U.S.
released data today pointing toward low inflation and weakness in
manufacturing. This news raised concerns about the near-term health of the U.S. economy, encouraging traders to think that U.S.
fundamentals are making the Dollar a less attractive alternative to investors.
Furthermore, now that the European Central Bank has taken steps to aid ailing
nations, investors want to move on from the sovereign debt issues in Europe.
Stronger demand for the Euro is likely to continue until late
next week when investors are likely to begin paring positions ahead of the
release of the European bank stress tests. On Wednesday, rumors began
circulating that eleven European banks are expected to fail their stress tests.
As we approach the release date, this type of rumor could encourage investors
to take profits after the recent rise and pare back positions until the
uncertainty clears up. Until the report is released on July 23rd,
look for trend traders to continue to drive the EUR USD higher as long as U.S. economic
data remains on the weak side.
Forex Trading News
Daily Forex Market News Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Forex News Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."
Elevate Your Trading With The Amazing Trader!
The Amazing Trader includes:
Actionable trading levels delivered to YOUR charts in real-time.
looking for your first broker or do you need of a new one? There are
more critical things to consider than you might have thought.
We were trading long before there were online brokers. Global-View
has been directly involved with the industry since its infancy. We've
seen everything and are up-to-data with recent regulatory changes.
The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.
The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.
Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.
The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.
Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.
Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.
Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.
WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES
CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN
EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE
PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE
INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC
REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL
SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR
SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.