Wednesday, July 28, 2010

Forex Market Review by

The Dollar appreciated against the most of its major counterparts on Tuesday, as a drop in U.S. consumer sentiment to a five-month low cut risk appetite. Yesterday, the CB Consumer Confidence index for July fell to 50.4, below its expected reading of 51.3, as Americans become increasingly concerned over the stability of their jobs and their wages. Meanwhile, a separate report showed that home prices rose more than predicted in May as a government tax credit underpinned sales.

Up ahead today, U.S fundamentals will again play an important role in the direction of the major currency pairs. US Durable Goods Orders are expected to provide evidence in support of the current recovery trend. Last month, the Core manufacturing figure rose by 1.6%; this time around, analysts expected a slightly smaller increase of 0.6%, which highlights the recent weakness in consumer confidence, and could potentially lead to more risk aversion.

Meanwhile, the Australian Dollar fell by the most in more than a week as a report showed consumer prices increased at a slower than predicted pace, increasing speculations that the central bank will hold interest rates unchanged in August. Also up ahead today, the New Zealand Rate central bank rate statement. Last time, the RBNZ increased the key interest rate by 0.25bps to 2.75%. This time around, another rise to 3% is expected.


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