U.S. Dollar Regains Positions on Mixed Fundamentals

Today, EUR/USD lost a small part of the pips that were gained yesterday after the Fed’s interest rate cut by 0.50%. Even the bad employment statistics didn’t prevent dollar from recovering from 1.4860 to 1.4814 against European currency. This can be also partially explained by the major resistance level that has formed near 1.4870 rate on EUR/USD.

Personal income in December rose by 0.5% — better than the analysts expected (0.4%), which can be a good sign for U.S. economy. Personal spendings were at 0.2%, higher than the expected value, but lower than 1.1% growth a year earlier. Core PCE inflation, as expected, didn’t change and was at 0.2% last month.

Initial jobless claims report showed a very disappointing dynamic this time — last week claims grew up from 306,000 (revised from 301,000) to 375,000 — that’s much more than 320,000 predicted by the economic experts.

Chicago PMI — the index of business purchasing activity — fell below the expectations (53.0) fro, 56.4 to 51.5.

Crude oil inventories in U.S. continued weekly growth trend and rose 3.6 million barrels last week, which is nothing but a good sign for the dollar, as the oil prices may stop affecting it negatively.

EUR/USD Rallies Despite of Holidays

Despite the holidays period has already came to the U.S. and European markets, EUR/USD is rallying up fast for the second day in a row now. And if today there is plenty of fundamental news that can push euro up by almost 100 pips against U.S. dollar, yesterday's bullish candle has no such reasons.

Today, the employment market of U.S. showed that it is suffering because of the subprime lending crisis too, initial jobless claims continue to grow - 349k against 340k expected, previous week value was also revised up from 346k to 348k.

November durable goods orders hadn't met the hopes of the analysts that expected 2.2% growth, it was reported at 0.1% - though, still better than the October's decline by 0.4%.

December Consumer confidence index reported by Conference Board was the only good indicator which came out in United States today - it grew up from 87.8 to 88.6.

Crude oil inventories fell during the week ending December 21 by 3.3 million barrels. And now Department of Energy says that at 293.6 million barrels they are in lower half of the average range for this time of year.

Dollar Stronger Against Euro, Pound

Dollar started to trade higher today against euro after the productivity report by the Bureau of Labor Statistics came out, as it was trading against pound sterling earlier in the morning after some bearish data on United Kingdom PMI and housing were released.

Nonfarm productivity (revised value) in third quarter of 2007 increased unexpectedly well - by 6.3%. Previous value was 4.9% and the analysts' expectations averaged at 5.8% growth. This indicator without any doubts will continue to strengthen dollar until the end of the week.

Factory orders in October also showed a growth that almost no one could see happening - 0.5%, while analysts' consensus was at 0% stagnation.

Bad news came with non-manufacturing ISM report which showed today that November Business activity index in services sector declined to 54.1% from 55.8% in October, which worse drop than it was expected - 55.0%.

Crude oil inventories again were in the red zone, but today with a very high negative value - 8 million barrels drop compared to previous week report. Combined with today's OPEC decision not to increase oil output, this news may hit dollar as the oil prices will surge to the new maximums.

Pessimistic Indicators from U.S.

U.S. dollar looks unsure whether to fall or to rise on the Forex market after some important macroeconomic indicators were released today. One of the most important data came out from the University of Michigan and Reuters - Michigan Sentiments Index, which represents consumer confidence. Consumer confidence is important, because it will determine future consumer spendings that in their turn fuel the U.S. economy growth.

Michigan Sentiments Index in November was 76.1; it fell by 4.8 points compared to its October value of 80.9. But according to over-pessimistic expectations (that were at 75.0), Michigan index did quite well this month. Of course, objectively it didn't.

Initial jobless claims for the previous week were released today by the U.S. Department of Labor. They fell right into the market forecast value of 330k, lower than last week's 341k (revised from 339k).

Leading market indicators are considered to be weak in their influence on markets behavior, but nevertheless their value for the October reflects current U.S. economical situation - decrease by 0.5%, below 0.3% expected drop and, of course, worse than 0.3% growth in September.

And with the U.S. commercial crude oil inventories another falling week, oil can be expected to see new record highs in the next days. Crude oil inventories decreased by 1.1 million barrels last week, following the 2.8 growth on previous week. High oil prices may hit dollar on Forex, pushing to the new bottoms.