USD – A Stronger Greenback For Now

The USD has been able to hold onto its gains made late last week as it has kept the EUR under pressure and shown the ability to have some staying power against the GBP and JPY. Broad market conditions remain nervous as evidenced by global bourses, particularly Wall Street and the manner in which the S&P Index has traded for nearly a week. Yesterday broad Retail Sales data beat its estimate, but the Core Retail Sales only held serve coming in with its expected result of 0.4%. Unfortunately the Empire State Manufacturing Index also turned in a brutal disappointment with a minus -11.1 reading compared to the anticipated mark of plus 13.9. Today PPI data will be brought forth from the U.S. and its expected broad figure is 0.7%. The results from these statistics today could prove interesting taking into context the recent gains in commodity prices until the last few trading sessions.

Industrial Production numbers will also be brought forth today from the States. Tomorrow Building Permits and Housing Starts numbers will be published. While the USD has certainly not escaped the shadow cast by the much debated Federal Reserve’s quantitative easing policies and a poor outlook for strong growth, the greenback has flourished in the past week due to doubts starting to rise again about the Sovereign Debt of Europe being called into question. Also it cannot be underestimated that there is a possibility that investors and financial institutions simply thought the USD had been oversold the past few months. However a short term trend is not a long term avenue and many roads still have to be traversed for the USD to prove it has staying power against the major currencies. The Fed seems to want a weak USD policy even though they say the opposite, but there can be no denying that quantitative easing is in fact a way of weakening the currency. Having said that and making matter complicated is the mindset that some safe haven trading may be coming into vogue with poor global economic prospects and nervous bourses.

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