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08/24/2008 - Consolidation setting in, but continue to favor USD

Posted by FOREX.com's Weekly Strategy in August 22nd 2008  
* Consolidation setting in, but continue to favor USD
* Commodity rebound is a bounce to sell on
* Status check: The US vs. the Rest
* Key data and events to watch next week

The USD made fresh new highs early in this past week, but was unable to sustain the gains and a consolidation phase appears to be setting in. The economic fundamentals largely supported those moves, with European data largely coming in steadier than expected and US data presenting worrisome elevated jobless claims, weaker housing and a larger than expected drop in the index of leading indicators (mainly due to the drop in building permits). We know the US housing sector remains mired in weakness and that the new homes segment is the weakest of this weak sector, so there should be no surprises. The jury is still out on the reliability of weekly jobless data due to extensions to unemployment eligibility passed in early July. But we also already know that the US labor market was soft, just not as bad as in prior downturns on a population adjusted basis.  Full text »

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Filed under: Weekly Strategy