Dollar financing issues will be critical - 28-01-09
The Euro regained the 1.32 level on Tuesday and pushed higher following the European data with a peak above 1.33 as risk appetite remained slightly higher.
US consumer confidence weakened slightly further to a record low of 37.7 in January from 38.0 the previous month. The decline at a time of lower energy prices and a new Administration will reinforce fears that consumer spending will remain at weak levels over the next few months. The Richmond Fed index moved slightly higher, but remained at depressed levels.
The currency moves were still influenced strongly by the degrees of risk appetite and the dollar regained some ground as confidence faltered.
The Euro edged firmer on Wednesday with hopes that the Federal Reserve would announce further measures to support the economy at the Wednesday FOMC meeting. There were also expectations that the Administration would expand the fiscal stimulus package and draw bad debts out of the banking sector. There was resistance above the 1.33 level.
Tim Clayton
Investica Ltd
E-mail: tim.clayton@investica.co.uk
+44 (0) 1452 781001
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