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Video for March 26th, 2008 (2 min 53 sec): Dollar Mostly Down as US Factory Orders and New Home Sales Decline
German Business Climate Improves
The IFO Business Climate in Germany saw improvement the last two month, after sliding for most of late 2007. It has managed to beat expectations the last 4 months by surprising economists with an improvement instead of a decline. Trichet and King Speak European Central Bank President Trichet, and Bank of England governor King both spoke before different panels of economic committees. Trichet warned of second-round inflation although inflationary pressures seem to have subsided for now. King reiterated the caution that must be used in determining policies, and explained to critics why the bank had reduced rates once and only by 25 basis points, so far this year. EUR/GBP Jumps
The EUR/GBP pair jumped 100 pips in just 2 hours, a big move for this normally quiet pair. Although King suggests that the Bank of England is fundamentally similar to the ECB and the Fed, his tone is less accommodating than Trichet's, who also lowered his inflation forecast.
Strong Industrial New Orders in Euro-Zone
The Eurozone also posted strong Industrial New Orders data as it grew 2.0% after slipping for the previous couple of months. Week US Factory Orders US Factory orders in February fell unexpectedly by 1.7% due to a record decline for machinery orders. Sales of New Homes Continue Sliding Also, sales of new homes in the US fell for the fourth straight month in February. The poor housing market figures that have been coming out has lessened in shock value, especially with forecasts of deeper declines. However, the focus has evolved from the housing market, to growth risks. The market therefore did react to the weak factory orders data. EUR/USD Back to 1.58 Level
The EUR/USD pair went from edging up quietly overnight to surging explosively during the European and early part of the US trading session. Since 5:00AM the pair has shot up 200 pips to break 1.5800 as strong euro-zone data came out. Poor Durable Goods Orders for the US extended Greenback’s weakness. So far this week, the market has essentially wiped out all the dollar-gains from last week. USD/JPY Dips on Weak US Data and Stock Market
Dollar weakness was pervasive as can be seen in today’s USD/JPY movements. Also starting at 6:00AM the pair started to decline, and continued in New York session as US stocks also declined. The pair has been more or less ranging for the past week after bouncing up from the 96 level set last Monday. Now the pair is trading around the 100 level. Risk Aversion Lifts the Yen as GBP/JPY Drops
After stalemating for all of yesterday’s session, the GBP/JPY finally broke under due to risk aversion. Also starting at 6:00AM, the pair dropped 350 pips in 2 hours, but managed to pare 150 pips by 2:00PM EST. Upcoming Releases Tonight, New Zealand will post trade balance data and Australia its Leading Index. Germany will then post consumer confidence, followed by UK's retail figures. Tomorrow, the US will release a GDP report, and the weekly jobless claims. |
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