The USD was besieged again on Thursday and the loss in value to the EUR and GBP came on a day Wall Street suffered also. Two poor Manufacturing Index reports shook the markets as the Empire State and Philly Fed Manufacturing Index readings both proved much more negative than anticipated. The weekly Unemployment Claims figures were also released and did manage a slightly better outcome than estimated, but this was not able to hold off bears that marched forward against both the greenback and equities. Today the University of Michigan will release its Prelim Consumer Sentiment number and an outcome of 74.2 is forecast, which would be lower than the previous recording of 76.0. Taking into consideration the spate of rather disappointing data from the U.S. the past two weeks, it cannot be called a stretch of the imagination to think that today’s release will rather challenged also – meaning that optimism may continue to be tested as market sentiment continues to sour.
There will be very little data from the U.K. or Europe today, both the EUR and GBP performed well. The two currencies marched forward as the ECB and IMF made statements saying that the ‘Stress Test’ European banks are facing will prove that the E.U. financial institutions are stable and competent. While questions persist about the continent’s ability to perform long term, the recent bounce in both the Single Currency and the Sterling have been good.
The JPY continued to gain against the USD on Thursday as risk adverse trading within Asian bourses brought out safe haven investors. Which brings up an interesting point and question, international bourses continue to show a lack of conviction and divergent results abound making for rather volatile movements. As the JPY continues to act as a safe haven, the USD has faltered the past two weeks as negative data has come across the wires. It must be asked if the USD has now entered a new phase in which poor sentiment about the prospects of the U.S. economy is actually starting to weigh against the greenback. However, it must also be taken into consideration that part of what is happening within the currencies is ‘optimism’ – justified or not – in the European Union’s ability to cope with their financial crisis and the possibility that a new ‘fair value’ is being sought as market participants become more tranquil even as broad markets continue to wobble.
Written by bforex.com
