Currency news - Dollar gains by default

Dollar gains by default - 13-08-08

The dollar pushed to fresh 6-month highs against the Euro in early European trading on Tuesday with a high close to 1.4815. The US currency was then vulnerable to profit taking after rapid gains over the past week and retreated towards 1.49.

The US trade deficit narrowed to US$56.8bn in June from a revised US$59.2bn the previous month. There was a firm 4.0% increase in exports which was the strongest monthly gain for over four years while there was a modest rise in imports.

There will be some optimism that the underlying trade position is improving which will underpin the dollar and there will also be upward revisions to second-quarter GDP growth which will tend to reinforce positive sentiment.

The retail sales data will be watched closely on Wednesday. In particular, dollar confidence would be seriously tested by any underlying monthly sales decline and underlying confidence surrounding the US economy will still be fragile.

Nevertheless, the US currency will continue to gain support from a lack of confidence in the other major economies. Japan recorded a second-quarter GDP contraction and markets are expecting a German contraction while the Bank of England has warned over the UK outlook.

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.