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 Corrects Up Before Holidays

EUR/USD played back fully the yesterday's decline, but still ended the last week before the holiday period with a small loss. Forex market will be open despite of any holidays, but the price volatility will be low and no major movements can be expected.

November personal income and spendings report turned out to be better than it was for October and not the least reason for it lies in the pre-holiday sales period. Personal income growth of 0.4% failed to meet the 0.5% expectation, but personal spendings grew up 1.1% which is a lot better than 0.7% forecast. Core PCE inflation, as forecast showed, remained at the same level as in October - 0.2%.

Michigan sentiment index for December was revised from 74.5 to 75.5, which is still below the previous the October's 76.1 value. The consensus among the analysts was that the value be left at 74.5.

Overall, these news are positive for dollar, that might make FOMC think twice before lowering the interest rates further.

Another Day of Weak U.S. Statistics

Euro tried to regain some of its strong positions against U.S. dollar today after some new weak economical statistics regarding personal income and spendings were released to the financial market traders. But after construction spending and very optimistic PMI reports were released dollar started to press on euro and EUR/USD returned to its daily open value.

The most notable are the personal income and personal consumption expenditures (PCE) data reported by U.S. Bureau of Economic Analysis - in October they both rose by 0.2% while markets were expecting 0.4% growth in personal income (same as in September) and 0.2% for PCE.

Chicago PMI report (Business Barometer) showed an increase of this index above the average expectations by the analysts. It was at 52.9 in November, while 50.5 was expected it was 49.7 in October.

Total housing construction spending in October 2007 decreased by 0.8% (seasonally adjusted) compared to September's value, that's below pessimistic expectations of 0.3% drop. Real estate sector of the U.S. economy is heading into a deep crisis and new data reports prove that easily.

Some Good Fundamentals from U.S.

Following the day of not so good (rather bad) economical news from U.S. yesterday, markets were surprised by some very optimistic indicators presented today. A reaction on both stocks and Forex markets was supportive with the stocks bulls, EUR and GBP to gain and the bears with JPY and USD to lose somewhat.
Personal income and spendings number for July came out at 0.5% and o.4% growth that is higher than 0.3% expected (for both). While the core PCE inflation came a little worse than expected - 0.1% against 0.2%.
Chicago PMI - the major manufacturing sentiment index came out 53.8 level increasing from 53.4 and above the expected 53.0.
July factory orders were the main surprise - 3.7% from the 1.0% previous month and 3.0% from the expected number for July.
Michigan sentiment index reached 83.4 number - which is higher than both previous and expected numbers and is a historically high value for this index.
Overall, almost every indicator came out surprisingly high and probably gave some fuel for the future Fed's interest rates decision.

EUR/USD Can't Stay Above 1.3700

After breaking back above the 1.3700 mark EUR/USD fell below this level as the economic releases on inflation and consumer confidence were released today. Struggling below this level, if continued, may precede the new bearish trend in EUR/USD, while rallying and staying above will mean a return to a long-lasting EUR/USD bull trend.
Personal income and spending June numbers came out today close to the predicted values - 0.4% to 0.5% and 0.1% to 0.1% respectively. Core PCE inflation came out at 0.1% level - below the 0.2% predicted. This means that the inflation indicators are not high yet.
Chicago PMI - a major manufacturing index for the North-West region - decreased significantly from 60.2 to 53.4, while 58.5 was expected.
Construction spending numbers continue to warn the market about the crisis in realty sector showing a decrease of -0.3%, while analysts expected 0.2% growth.
Consumer confidence - the main surprise of a day which kept dollar below 1.3700 and stock markets high - came out at the 112.6 level (far above 105.4 expected) - at its highest value since 2001.