PCE price index saves US Dollar from taking nose dive

Published on June 28, 2011 by admin · No Comments

Foreign Exchange Overnight/Morning Ranges:

Rate EUR/USD 1.4252-1.4327

Rate GBP/USD 1.5911-1.5999

Rate GBP/EUR 1.1152-1.1192

The US dollar saw an uninspiring day’s trading against other currencies due to a lack of economic data to fuel the markets. Yesterday the only data releases were core PCE price index came in marginally better than expected at +0.3%, personal spending data, which was flat, whilst personal income rose slightly less than expected at 0.4%.

The dollar closed the day more or less unchanged against the pound after the sterling had seen near 5-month lows against the dollar during trading. Meanwhile the dollar dropped by over 1.1% against the euro. This was more down to euro strength gained by the potential Greek bailout being agreed. The main dollar focus today will be on the CB consumer confidence reading, expected to come in at 68.

Currency markets continue to react to any news relating to Greece. The Euro bounced from its lower levels after French President Sarkozy said that its banks would give Greece 30 years to repay its debts by extending their loans. According to market sources, the Germans are expected to follow. We now wait for the vote on the Greek austerity plan in their parliament today/tomorrow which is expected to be passed.

Sterling weaker ahead of public sector strikes on Thursday and after today’s GDP data which confirmed the economy grew by a disappointing 0.5% in the 1^st quarter. Commodity based currencies also weaken as gold and oil trade lower.

EUR/USD currently 1.4260. Support 1.4200, resistance 1.4500.

GBP/USD currently 1.5922. Support 1.5700, resistance 1.6000.

GBP/EUR currently 1.1168. Support 1.1100, resistance 1.1350.

Oil $ 90.49 Gold $ 1498

Dow +0.91% FTSE +0.3% Nikkei +0.74%