Greenback Hardly A Safe Haven

Currencies Direct September 23rd 2010 - 2 minute read

FOMC decision and statement from Tuesday evening was still the catalyst of
movements in all of the markets yesterday, as Asian and European investors had
the opportunity to react to the news. Further US Data also showed that home
prices dropped 3.3 percent in July from a year earlier, the eighth consecutive
decline, as foreclosed properties flooded the market. Prices fell 0.5 percent
from June vs. a market expectation for only a 0.2% decline, the Federal Housing
Finance Agency in Washington
said yesterday. The time it would take to clear the market of homes for sale
also hit a 10 year high of 12.5 months.

from the European Unions statistic’s office yesterday showed that industrial
orders declined more than economists forecast in July, led by a drop in capital
goods such as factory machinery. Orders in the 16-nation euro area decreased
2.4 percent from June, when they rose 2.4 percent. Economists had expected
orders to drop 1.4 percent. Eurozone consumer confidence figures for September
also remained unchanged from the August reading at -11.

minutes of the most recent Bank of England meeting, released yesterday,
signalled that it’s moving closer to more asset purchases, joining the Federal
Reserve in contemplating further stimulus to revive a flagging economic
recovery. That may put both the expansion of the central bank’s 200
billion-pound government-bond holdings and buying other securities on U.K. officials’
agenda. Policy maker Adam Posen last week argued that a “plan B” approach
for the Bank of England should be “heavy-duty credit easing.” The
Confederation of British Industry also cut its gross domestic product forecast
for next year.

the US
data front today, we have US initial unemployment claims for the week ending
September 18 and August’s existing home sales. In Europe,
we have the first reading of the PMI’s. A moderate decline of the composite
index from 56.2 to 55.7 is expected. For this indicator, the question will be
whether the actual decline, if any, will be enough to shift the market focus
again to the risks of Europe in such a way
that it will outweigh the overall story of dollar weakness.

by Tim Lewis

Written by
Currencies Direct

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