ForexInfoCenter

03/02/2008 - Dollar hammered by weak US data; breaks down out of range

Posted by ForexInfoCenter in February 29th 2008  

* Dollar hammered by weak US data; breaks down out of range
* How high can the EUR go?
* Multiple central bank rate decisions next week
* Key data and events for next week

After trading in a broad consolidation range for just over three months, the greenback plunged to new all time lows against the EUR, breaking above the key psychological/ technical 1.5000 level. Follow-through buying has been abrupt and this is the result of the relative suddenness of the break-a lot of speculative buyers were caught off guard-and the amount of option interest at/above 1.50 generating EUR/USD buying demand. The immediate catalyst on Tuesday was a string of worse-than-forecast US data reports (higher PPI, lower home price, and sharply weaker consumer confidence), but the move really got going after Fed Vice Chair Kohn suggested that the US housing slump had more room to go and that financial market stabilization would be more prolonged. In short, Kohn suggested that the much hoped-for recovery in the second half of 2008 was likely to be postponed. That prospect of light at the end of the tunnel had been helping to support the USD despite overwhelming expectations that the US economy was softening and US rates were headed lower. Once that light went out, the buck went with it.  Full text »

digg this! | del.icio.us | Technorati | Stumble It!

Read More...

Filed under: Weekly Strategy