Euro Rises as Dollar Weak on Average Releases

Today EUR/USD again showed a good level of gains, recovering from the major drop that was seen on Monday. It's already up by almost 0.8% and is looking strong. The reason for this behavior lies in the good Eurozone fundamental data and average data from U.S. today.

Initial jobless claims report for the last week showed an insignificant drop by 1,000 compared to previous 302,000 (which has been revised up from 301,000). The analysts expected a growth to 320,000 that week.

The report by National Association of Realtors on Existing home sales in December showed a bigger than expected decline — to 4.89 million from 5,00 million in November (annually adjusted).

Crude oil inventories in U.S. continued to grow in the past week, rising up 2.3 million barrels, compared to previous value. This growth can mean a domestic demand decline and the wish to increase the inventories while the oil prices are quite low.

Euro Down Fastest Since December

EUR/USD unexpectedly fell today after the moderate fundamental statistics were released in the United States. This currency pair declined from 1.4803 opening price to 1.4656 making it the largest daily drop for EUR/USD since December 14.

CPI (Consumer Price Index) in December showed a better than expected growth, increasing by 0.3% - still lower than in previous month (0.8%), but above the forecasted 0.2%.

Net foreign purchases of the long-term securities in November were at quite a high level - $90.9 billion, but lower than October's $114.0 billion.

December's industrial production stalled with 0% change, but that can be considered a good news, because the negative change has been expected. Industrial capacity utilization dropped slightly, going down from 81.6% (revised from 81.5%) to 81.4%.

U.S. crude oil inventories last week showed a gain at last increasing by almost 4.3 billion barrels after the previous report of 6.7 billion barrels dropdown.

EUR/USD Mildly Volatile on Trade Balance Data

EUR/USD was ranging today inside the yesterday's rate limits which were formed with the bullish tendencies triggered by the Tuesday FOMC meeting's statement. Main operational interest rate in the United States was cut by 25 basis points, which equals 0.25% - from 4.50% to 4.25%, while futures markets for the interest rate predicted a 0.50% cut.

Today came out the information on the international trading balance deficit for October 2007 - it increased from $57.1B (a revised value from $56.5B) to $57.8B, while only a mild growth to $57.0B was expected. The reason for the deficit growth was in the fact that imports growing faster than the exports.

U.S. crude oil inventories already made it a habit to drop every week, like there are not enough reasons for the oil prices rally yet. Last week inventories fell by 0.7 million barrels after 8 million decline in a previous week.

Meanwhile federal budget deficit appeared above the average expectation value of $90.0B. In November it went up from the October's $55.5B to $98.2B.

EUR/USD Retraces After Bad Fundamentals

EUR/USD seemed almost completely independent of the important fundamental indicators which were signaling the worsening economical situation in USA. EUR/USD was falling by more than 100 pips during the day, but then it returned to a more moderate loss - 50 pips.

Manufacturers' durable goods orders in October 2007 decreased by $0.9 billion which is 0.4% the previous month value. The consensus forecast for this value was at 0%, meaning that the orders shouldn't been changing at all.

National Association of Realtors announced its October existing home sales number - 4.97 million annualized, well below both 5.03 million in September and 5.00 expected for October.

Crude oil inventories reported by the U.S. Department of Energy from November 16 to November 23 declined by 0.4 million barrels, showing another week without an increase, which is so needed after some major inventories downfall several weeks ago.

CPI at 0.3%, Jobless Claims at 330k, Oil Inventories Grow

The release of the not so good news from the U.S. economy caused a wave of bullish dollar speculation on Forex with the increased risk aversion sentiments among traders. Going back from stocks to bonds wasn't prevented even by the fear of another possible cut rate before the year's end. EUR/USD fell from almost 1.4700 to the powerful psychological support level of 1.4600.

Bureau of Labor Statistics published its consumer inflation data - CPI increased only by 0.2% in October, whereas 0.3% growth was mostly anticipated. U.S. Department of Labor gave its numbers for the previous week's initial jobless claims - 339,000 - 14,000 higher than expected.

Crude oil inventories report finally gave a positive sentiment for the dollar bullish traders - there was a 2.8 million barrels growth last week. A good sign after some major decreases, which spiked oil prices to $100/barrel and depreciated dollar against other currencies.

Unexpectedly, Philadelphia Fed General Business Conditions Index increased significantly in November compared to October - constituting 8.2 against 6.8 in October with even more pessimistic forecasts for November.

Oil And Home Sales Fall Again

This day was very volatile on Forex EUR/USD pair, but it was without a distinct leader among those two. With dollar falling and rising during the day it ended almost at the same point it started. But trend for the rest of the week could have been probably founded today by two important fundamental reports on U.S. economics.

First, the crude oil inventories for the last week fell by whopping 5.29 million barrels. Department of Energy even changed the phrase in its report from "well above the upper end of the average range for this time of year" to "near the upper end of the average range". With low oil inventories, the price for this vital commodity can continue its fast growth seen during the last days. And expensive oil will almost certainly mean cheap dollar.

Second, existing home sales for September showed decreased by almost 0.46 millions to 5.04M (total annual rate). That is more than 19% lower than the September 2006 figure and also significantly lower than National Association of Realtors expected for this September. Weak real estate reports adds another reason for FOMC to lower interest rates next meeting (31st of October). And that can't be good for dollar too.

EUR/USD Fluctuations Continue

EUR/USD retraced back to 1.4200 level today after some very disappointing housing data came out in U.S. Overall situation continues to remain uncertain with the EUR/USD ranging between 1.4050 and 1.4250. It now formed a clear plateau pattern on the daily chart marking some major break in the Euro vs. Dollar struggle.

Housing report for September showed a further downfall in this economics sector with the decrease in both housing starts and building permits numbers exceeding pessimistic market forecasts. There were 1,191k housing starts (against 1,285k expected) and 1,226k new building permits (against 1,300k expected) this September.

Contrary to real estate sector bad news September CPI report showed a better than expected value - 0.3% against 0.2% expected, and that's from the -0.1% in August.

Crude oil inventories report for the October 8-12 week showed a major increase in commercial oil inventories - 1.8 million barrels, which can easily compensate for the previous decrease by 1.67 million barrels.

Dollar Loses On Good U.S. Trade Balance

A significantly improved trade balance of the United States was reported today with the value of -$57.6B ($1.6B improvement from previous month). While narrowing trade balance deficit is a good news for the whole U.S. economy a reaction on this news wasn't very good on the currency market. Dollar stopped its strengthening and gave up almost 100 points against Euro currency hitting 1.4240 daily maximum on EUR/USD.

Some other good news came from employment sector of the economy, showing that only 308k jobless claims were issued last week, which is slightly better than 320k of the previous report.

On the bad side U.S. oil inventories had a rather sharp fall last week - 1.7M barrels, which is especially worrying just before the heating season. But the whole inventories volume is above average level, so it might be not so bad after all.

Bad Fundamentals - Good for USD?

While dollar continued to rebound its weak positions today after EUR/USD failing to break 1.4180 resistance, fundamental stats from United States again came out below expectations. And again this caused a dollar rally against the Euro currency. ISM report on business activity for September 2007 showed a decrease by 1% - from 55.8% to 54.8% - well below the pessimistic expectation of 55.0%. After this report dollar went high to its weekly minimum at 1.4130 and now continues to gain strength.

One fundamental news that helped dollar and wasn't negative is the increase of the commercial crude oil inventories by 1.2 million barrels last week. This is logical, since when commodity prices are decreasing, currency gain value. As to the reaction on ISM services index - bad fundamental data now scare stock market investors away, thus making them to cash out into dollars (giving it more demand).

Better Than Average Data From U.S. Pushes EUR/USD Above 1.3700

This is a bit confusing situation for the financial markets, since the good economical data from United States should empower USD causing EUR/USD to fall, but today good data on labor productivity and ISM services index caused EUR/USD to soar. This can be explained by the increased optimism in the U.S. economy which causes more big traders to continue carry trading, during which USD is in a downtrend.

U.S. crude oil inventories in the past week fell (again) by 3.9 billion barrels, but still remain at a high level for the current seasonal average. One of the possible reasons for this decrease can lie in a hurricane season (which is quite weak in this year so far).

Initial jobless claims in the past week dropped to 318,000 compared to 337,000 previous week, which while still a high number is better than 330,000 expected by the market. But the more important employment data - nonfarm payrolls for August, will come out tomorrow.

ISM services index (business activity) in August came out at 55.8 level - the same as the month before. This is a good level for this index, especially when analysts predicted its fall to 54.5.

Nonfarm productivity in second quarter of 2007 (revised value) increased by 2.6%. This growth exceeded both the market expectations (2.4%) and the Q1 value (1.8%). High productivity in the nonfarm area is a good sign for the U.S. economy, which by the end of 2007 can show a very strong growth.

EUR/USD To Break Above 1.3850?

After the Federal Open Market Committee released its statement yesterday EUR/USD remained on its positions until today's early European session, which brought Euro to a rally behind the crucial 1.3800 mark. Will EUR/USD stay above it? Probably. Will EUR/USD break the 1.3850 resistance barrier to soar high to 1.4000 level? Less probably. Let's look on the fundamentals.
Yesterday a labor productivity data for the industrial sector came out lower than expected by the majority of traders - 1.8% increase, instead of 2.1%. Meanwhile, consumer credit for June this year increased by 13.2 billion dollars, while analysts were expecting 6 billion dollars increase.
FOMC released another 'inflation-concerned' statement, leaving the interest rates at 5.25% level. While the main concern for the FOMC remains the inflation, it started to get nervous because of the risks connected with the economical growth and especially housing crisis.
Today data on business wholesale inventories came out slightly better than predicted - increased by 0.5% instead of 0.4%, while the crude oil inventories again dropped down significantly - by 4.1 million barrels.
Despite of FOMC being more inflation orientated, the economical growth correction will probably make them to decrease the interest rates at least once (or at least stop increasing it even more). Currently, housing data and oil inventories (taking in mind current oil prices) don't look very promising for the U.S.

Dollar Struggling Below 1.3700

Another day marked by U.S. dollar's struggle to hold below the 1.3700 mark and get out of the bearish trend. EUR/USD is waiting for more bull power before turning back to rising or is just being corrected by some good yesterday's economical news from United States.
ISM reported on Manufacturing PMI in July disappointed many dollar bullish traders as it came out at 53.8%, below the 55.5% expected, showing some possible problems in the manufacturing sector of the U.S. economics.
Previous week's oil inventories report showed a great decline of 6.5 million barrels of crude oil, while commercial petroleum inventories fell by 0.7 million barrels. But total present volumes of inventories remain satisfactional.
Today's news are less encouraging than usually - but one day doesn't mean a lot in the economics. Further news releases will tell us what to expect from U.S. economy and USD.

EUR/USD Drops Down With Bad Data on Housing and Oil Inventories

EUR/USD today is showing a very intensive bearish rally dropping to 1.3700 level after failing to take over the 1.3850 resistance mark. The major reason for such market behavior can be seen in a technical correction which should have came after the overbought condition in EUR/USD reaches its peak. Personally I thought that this correction will come a bit later letting the EUR/USD to get higher before falling down, but market is market - U.S. dollar is rallying despite of bad macroeconomic statistics which came out today.
Existing home sales - a major indicator of the U.S. economy since the crisis in the real estate sector began earlier this year - came out at 5.75 million units - below the expected 5.90 million and below the previous number of 5.98 million in May.
Crude oil inventories in the week ending on July 20 declined by 1.1 million barrels, while the motor gasoline inventories rose by 0.8 million barrels and distillate fuel inventories increased by 1.5 million barrels.

Mixed Data from U.S. Again

Some more mixed data followed yesterday's PPI and industrial production today. Their affect on EUR/USD could be noticed as it rallied to new decade maximum on 1.3832 and then returned back below the crucial 1.3800 mark. Consumer Price Index was released slightly better than consensus (0.2% against 0.1%, while it was quite low compared to previous 0.7% rise in June 2006). As for real estate sector - a decline in building permits was dubbed with the increase in new housing starts. Business crude oil inventories were also released today and they showed a decline in 449,000 barrels for the last week. FOMC minutes will be released tomorrow and all Forex traders will listen carefully what Ben Bernanke has to say about U.S. economy so far. Some very high volatility can be expected tomorrow.