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Video for April 23rd, 2008 (3 min 12 sec): Dollar Strength Returns To Market as Greenback Pares Yesterday's Losses AUS Consumer Prices Rise 4.2%, Fastest Annual Pace in 7 Years Australia released consumer inflation data for the 1st quarter last night. Prices were up 1.3% on the quarter and 4.2% in annual terms. The annual rate was at the highest level in 7 years. In addition to rising energy costs that have been pushing up inflation globally, the boom in Australia's export industries has kept employment at high levels driving up wage inflation. AUD/USD - Aussie Climbs on Inflation Data But Turns Back Overnight
The news boosted the Aussie following the release and the AUD/USD pair rose to a 24 year high. As European trading progressed, the greenback strengthened and pared down some of those earlier gains. The data implies that the Bank of Australia has little room to lower rates even as the overall economy shows signs of slowing. EUR and GER Services Upbeat, Manuracturing Growth Slows The Eurozone Services PMI beat expectations of a decline, and showed improvements for the sector in April. The increase was led mainly by Germany, but was not spread throughout other parts of the Eurozone. The picture was not as rosy for the Euro-zone's manufacturing sector. The PMI fell to 50.8 from its 52 reading in March. Germany also saw its PMI slip from 55.1 to 53.6. Manufacturing is being squeezed by euro appreciation and waning demand from foreign markets as the global slowdown widens. EUR/USD - Euro Falls From New Record High
The EUR/USD pair retreated more than 100 pips today from yesterday's record high. In addition to the weaker manufacturing data, comments from the Luxemburg Finance Minister in which he said recent appreciation of the euro is a problem, combined to weaken the Euro. There is also some technical factors at play as the pair may be in a correction phase after the recent uptrend that lasted four session. UK BOE Minutes Show Diverging Views, While Mortage Lending Hits Record Low The Bank of England minutes showed that 6 policy members voted for a 25-basis-point rate cut, one voted for a 50 bps cut, and two members voted for no change. The result was a 7 against 2 in favor of a cut, which was determined to be 25 basis points. In a separate release today from the British Banker's Association, banks approved 35.4K mortgages during March, the lowest since records began being kept in 1997. GBP/USD - Pound Gives Back Yesterday's Gains vs Dollar
The GBP/USD pair continued its volatile trading this week. Following the weak numbers from the UK release, the US Dollar rallied 160 pips against the Sterling, paring yesterday's losses. Traders and investors have been very sensitive to the news this week, as they look for direction from the fundamentals.
CAN Retail Sales Decline 0.7% in February
In Canada, retail sales unexpectedly fell in February, declining 0.7%. The decline was spread among all sectors. After 4 months of strong gains, the sales in the automotive sector decreased 1.3%. Retail sales excluding autos was down 0.3%. USD/CAD - Loonie Falls Following Retail Sales Data
After trading in a very narrow range overnight, the USD/CAD pair surged following the poor Canadian data and general US Dollar strength. The pair broke through this week's previous highs, rallying 120 pips, before testing the 1.02 level. Upcoming Releases Tonight, the Reserve Bank of New Zealand will decide on interest rates, and later Japan will post its corporate service price index. Overnight, Germany will release its IFO Business Climate index and the UK will unveil retail sales figures. Tomorrow, the US has three releases, orders for durable goods, weekly jobless claims and new home sales. Canada finishes the day off with its monthly policy report. |
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