US Housing market Supported The Dollar
Dollar continued to rise on Thursday hitting a 5 ½ -month peak against the basket of currencies, supported by a surprising rise in June US home sales and lowered expectations for euro zone interest rate increases. Pending home sales advanced unexpectedly by 5.3%, while estimated to drop by 1.0%, offsetting the disappointing report for the initial jobless claims, which were up by 7 000 for the previous week to a total of 455 000. The data signaled that the current housing slowdown may be near its bottom and also backed expectations of U.S. interest rate hikes this year. During the day the European Central Bank left the interest rates unchanged at 4.25% and after the meeting its president Jean-Claude Trichet said he expects economic growth in the eurozone to weaken substantially this year, even as he sees inflation remaining above the target. Following his comments, investors unwound bets for ECB interest rate increases this year, limiting the euro's appeal to global investors. The single currency fell to seven week lows against the dollar to $1.5333. On the contrary, the greenback eased against the yen to 109.37 yen, after the drop of the US equity markets and collecting profits from the pairs’ recent gains. The sterling also dropped against the dollar to eight week bottom at $1.9343 as Bank of England also kept the interest rates on the island unchanged at 5.00%.
EUR/USD
The continuing drop of the euro pushed the pair down towards the key support level at 1.5290. Its overcoming could trigger a significantly deeper correction and next supports are seen at 1.5140 and 1.5000. On the upside, resistance is seen at 1.5460, followed by 1.5500 and 1.5580.
EUR/USD (chart, table)
USD/JPY
After the significant rise from the previous day the short term picture remains unchanged as the level at 109.80 continues to show resistance to the upward movement. If broken successfully, next resistances will be 110.50 and 111.20. On the downside, support is seen at 109.10, followed by 107.90 and 107.30.
USD/JPY (chart, table)
GBP/USD
The negative trend for the sterling remains and the pair moves toward the solid bottom at 1.9390. If broken successfully, next supports will be 1.9250 and 1.9180. If the upward movement is resumed, on the upside resistance is seen at 1.9530, followed by 1.9570 and 1.9620.
GBP/USD (chart, table)
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08.08.2008 FX daily review.pdf, 199 Kb
