Breaking News

Confidence In The U.S., Confidence In The USD

By Jeremy CookForexMay 29, 2013 05:59AM ET
Confidence In The U.S., Confidence In The USD
By Jeremy Cook   |  May 29, 2013 05:59AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
Everything seems to be turning up roses for the US economy at the moment, as another session was dominated by better than expected US data and a stronger US dollar. Home prices and consumer confidence, which rose to a 5yr high, both beat expectations and, coupled with the news that S&P had upgraded their rating of the US banking sector, the market was only going to travel one way.

That exuberance has carried over into the Asian session overnight, with the USD continuing from where it left off. It seems almost obvious now that GBPUSD should test the years lows of around 1.48 with EURUSD under similar pressure towards its year-to-date low of 1.2750.

The commodity currencies continued to get hurt yesterday as fears over growth came to the fore. The main mover yesterday was South African which came in for a beating following further strikes by miners in recent months leading to a 7.1% fall in industrial production and a hit to growth that led to a below expectation GDP print of 1.9%. ZAR has lost 1.7% vs the pound in the past 36hrs as a result.

We forecast at the beginning of the year that the Aussie dollar was likely to be one of the ‘Dogs of 2012’ and overnight the currency has become a lot more canine. Poor construction data has caused local banks to revise GDP estimates lower while PIMCO, the world’s largest bond investor, called for another RBA rate cut sooner rather than later in a research note which came out this morning. AUDUSD is currently close to a 19 month high while GBPAUD is at an 8 month high.

Focus on Europe will likely dominate today with the European Commission delivering its evaluation of the budget plans of the EU-27 this morning. Today’s FT is leading on a story that France, Spain and the Netherlands are to be given a ‘waiver’ on the need to hit their 3% annual deficit limit. This could be a sea-change in the move away from austerity in the Eurozone, although the switch to growth is by no means as easy as limiting the discipline.

The shift away from austerity is designed to promote employment and we shall see this morning whether German divergence from the rest of Europe has continued as we get unemployment details for the month of May. The market is looking for unemployment to rise by 5k.

UK data is due in the form of CBI reported sales which, somewhat strangely, the market is expecting to increase. Labour market indicators have remained onerous of late and we would be very surprised if this has led to an increase in sales. A disappointment here could easily be the release that puts GBPUSD through 1.50.
Indicative Rates
Indicative Rates
Confidence In The U.S., Confidence In The USD

Related Articles

Confidence In The U.S., Confidence In The USD

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Are you sure you want to delete this chart?
Write your thoughts here
Replace the attached chart with a new chart ?
Post also to:
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Post 1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email