Currency news - Retail trends key for dollar

Retail trends key for dollar - 12-10-07

The dollar would secure a dual boost from a solid retail sales report as pressure for a further Federal Reserve rate cut would ease.

After lows around 1.4240 as the Euro secured strong buying support, there was a fresh New York dollar reversal to 1.4190 with cross trading an important influence.

The August US trade deficit narrowed to US$57.6bn from a revised US$59.0bn in July as imports edged lower while exports pushed slightly higher. With oil imports rising, there was a further reduction in the underlying deficit. The lower deficit will provide some support to third-quarter GDP and will also boost confidence that the US underlying trade situation is improving.

Jobless claims dropped to 308,000 in the latest reporting week from 320,000 previously which suggests that the labour market is still firm. Housing foreclosures fell in September, although there was still an annual increase of close to 100%.

Dollar confidence remains very fragile and there has been further speculation over central bank diversification away from the US currency, especially with persistent speculation that interest rates will be cut again during the fourth quarter. The retail sales data will be watched closely on Friday for further evidence on underlying spending trends with a weak report sparking renewed fears.

Tim Clayton
Investica Ltd
E-mail: tim.clayton@investica.co.uk
+44 (0) 1452 781001

Full list of daily currency analysis

This analysis report is intended for distribution to ACM Advanced Currency Markets SA private, corporate customers and members. Information contained in this report is based on data obtained from sources considered to be reliable, however, no guarantees be made by ACM Advanced Currency Markets SA as to the accuracy, timeliness and completeness of the data. The opinions and forecasts contained herein are subject to change without notice and ACM Advanced Currency Markets SA accepts no liability for any losses, damages and/or expenses incurred arising from or in any way connected with the utilisation of all or part of this report. This report is meant for information purposes and is not intended to be and should not be construed as an offer or solicitation to buy, sell foreign exchange or indeed any other financial instruments. This report, or any part of it may not be reproduced or distributed without the prior consent of ACM Advanced Currency Markets SA.