Economical News
USD
On the basis of the last consecutive three trading days we can strongly confirm that the U.S. economic condition has definitely become less favorable and it is about to face a severe dollar crisis. During those last three days, the dollar dropped several times to new records low versus the 15-nation currency. The EUR touched $1.5150 in early European trading -- up from $1.5120 in New York the previous night and above a record $1.5143 reached earlier Wednesday. The EUR gave up a little ground and was trading at $1.5122, still above Wednesday's close.
An additional element which assisted the greenback was the unchanged level of GDP, which was published yesterday. The Gross Domestic Product rose at a 0.6 percent annualized rate, unchanged from the initial estimate last month.
Not only the economic growth slowed and does not imply any signals of improvement for the short tem, but also U.S. citizens continue to deal with intense inflation increase which is above the Fed's comfort zone - a warning mix that predict further trouble for the U.S. economy. The main fear now is that the U.S economy may be heading towards a situation of “stagflation”, which means slowing growth and rising inflation. If stagflation occurs then it will take the U.S economy far longer to repair itself.
In addition to rising inflation and unchanged growth, the U.S. government reported yesterday that jobless claims rose by 19,000, to 373,000, which was worse than anticipated providing more evidence that the general economic sluggishness is spilling over into the job market.
As it seems for the moment we strongly believe that a notable shift in the Fed's sentiment is required in order to see any real recovery, which the U.S. economy desperately needs.
EUR
The EUR continued to surge ahead yesterday and it reached a multi-year high versus the USD by rising up to the 1.5201 per dollar level. The EUR has been surging strongly against the dollar since Tuesday, breaking through the $1.5 mark for the first time since it started trading in 1999, as concerns about the U.S. economy were fueled by discouraging GDP from key retailers and homebuilders.
The higher EUR makes goods from the 15-nation currency zone more expensive for customers abroad, or cuts into manufacturers' profits if they try to keep the U.S. dollar price of products constant. However, European Central Bank downplayed those concerns earlier this week. The ECB noted that more than 50 percent of Euro-zone countries' exports go to other Euro-zone members and so are not vulnerable to currency fluctuations. The Euro-zone exports have strongly contributed to growth of the 15-nation currency but on the other hand a weaker dollar boosts exports from the US to Europe.
The EUR is being pushed forward by speculation of aggressive ECB policy of gradual rate increases, and on the basis of this fact in combination with ongoing weaker dollar forecasts we may soon see the EUR/USD traded at 1.55.
JPY
Yesterday the Japanese yen gained against the 16 most traded currencies. The yen rose against its major counterparts as falling stocks led investors to cut holdings of higher-yielding assets. Yesterday the JPY advanced 2.8 percent to 13.92 per rand and gained 1.2 percent versus the New Zealand dollar as investors reduced carry trades. The U.S. currency also approached a 2 1/2-year low versus the JPY by breaching below the 105.00 per dollar mark. The prime sentiment is that the U.S. currency will continue to be battered as the economy suffers and the JPY will continue to gain momentum as “anti-risk” sentiment applies a strangle hold on carry trades. In addition, on the basis of Japanese data which was released today, there was a surprising jump in consumer spending and rising consumer prices which will also likely assist to push the JPY higher today and the Japanese currency is likely to remain in the bull ring over the near term.
USD
On the basis of the last consecutive three trading days we can strongly confirm that the U.S. economic condition has definitely become less favorable and it is about to face a severe dollar crisis. During those last three days, the dollar dropped several times to new records low versus the 15-nation currency. The EUR touched $1.5150 in early European trading -- up from $1.5120 in New York the previous night and above a record $1.5143 reached earlier Wednesday. The EUR gave up a little ground and was trading at $1.5122, still above Wednesday's close.
An additional element which assisted the greenback was the unchanged level of GDP, which was published yesterday. The Gross Domestic Product rose at a 0.6 percent annualized rate, unchanged from the initial estimate last month.
Not only the economic growth slowed and does not imply any signals of improvement for the short tem, but also U.S. citizens continue to deal with intense inflation increase which is above the Fed's comfort zone - a warning mix that predict further trouble for the U.S. economy. The main fear now is that the U.S economy may be heading towards a situation of “stagflation”, which means slowing growth and rising inflation. If stagflation occurs then it will take the U.S economy far longer to repair itself.
In addition to rising inflation and unchanged growth, the U.S. government reported yesterday that jobless claims rose by 19,000, to 373,000, which was worse than anticipated providing more evidence that the general economic sluggishness is spilling over into the job market.
As it seems for the moment we strongly believe that a notable shift in the Fed's sentiment is required in order to see any real recovery, which the U.S. economy desperately needs.
EUR
The EUR continued to surge ahead yesterday and it reached a multi-year high versus the USD by rising up to the 1.5201 per dollar level. The EUR has been surging strongly against the dollar since Tuesday, breaking through the $1.5 mark for the first time since it started trading in 1999, as concerns about the U.S. economy were fueled by discouraging GDP from key retailers and homebuilders.
The higher EUR makes goods from the 15-nation currency zone more expensive for customers abroad, or cuts into manufacturers' profits if they try to keep the U.S. dollar price of products constant. However, European Central Bank downplayed those concerns earlier this week. The ECB noted that more than 50 percent of Euro-zone countries' exports go to other Euro-zone members and so are not vulnerable to currency fluctuations. The Euro-zone exports have strongly contributed to growth of the 15-nation currency but on the other hand a weaker dollar boosts exports from the US to Europe.
The EUR is being pushed forward by speculation of aggressive ECB policy of gradual rate increases, and on the basis of this fact in combination with ongoing weaker dollar forecasts we may soon see the EUR/USD traded at 1.55.
JPY
Yesterday the Japanese yen gained against the 16 most traded currencies. The yen rose against its major counterparts as falling stocks led investors to cut holdings of higher-yielding assets. Yesterday the JPY advanced 2.8 percent to 13.92 per rand and gained 1.2 percent versus the New Zealand dollar as investors reduced carry trades. The U.S. currency also approached a 2 1/2-year low versus the JPY by breaching below the 105.00 per dollar mark. The prime sentiment is that the U.S. currency will continue to be battered as the economy suffers and the JPY will continue to gain momentum as “anti-risk” sentiment applies a strangle hold on carry trades. In addition, on the basis of Japanese data which was released today, there was a surprising jump in consumer spending and rising consumer prices which will also likely assist to push the JPY higher today and the Japanese currency is likely to remain in the bull ring over the near term.
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