USD – Tentative Results For Investors

A mixed day of trading greeted investors entering Monday’s broad markets. The USD traded to the weaker side of its range against the EUR and GBP, but still maintained its better values achieved over the past month. Wall Street began the day in positive territory, but as the day progressed struggled to keep its head above water. There was a lack of economic data from the U.S. yesterday and because of this investors were left to sift through their existing sentiment. The Empire State Manufacturing Index will be released today and is forecasted to produce a reading of 20.1. The previous report from the New York Fed was unimpressive and investors will examine this data with a nervous eye. Following the weak Retail sales last Friday, market participants cannot be faulted for being a bit weary as investors try to find a glimmer of hope for the prospects of growth.

The USD has had a sensational trend against the EUR and GBP since December and even though it has had a short term encounter which has found it trading slightly lower, this doesn’t mean that a long term reversal is about to take place. The U.S. economy remains one of the few major economies in which some analysts are still anticipating some type of interest rate hike – though it will almost certainly come long term – if at all. This is because up until now, the GDP in the States has shown enough growth to create the temptation to believe that the Federal Reserve may have to create a tighter fiscal policy. Having said that the recent economic data from the U.S. continues to show that unemployment remains a problem along with consumer spending. Therefore potentially strong growth may be hard to sustain in the States and the possibility of stagnation does exists. In some respects this has been the reason Wall Street has found a tough path the past couple of months and there is a realization that the major international economies all face extraordinary challenges. Tomorrow Building Permits data will be released from the States. Investors today will likely continue to take a cautious approach with their portfolios.

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