Dollar paired gains due to profit booking after a three day rally ahead of the FOMC meet.
Dollar paired gains due to profit booking after a three day rally ahead of the FOMC meet. Most of the investors were sidelined waiting for the rate decision from the policy makers.
The policy setting FOMC is widely expected to cut the benchmark overnight lending rate by only a quarter of a percentage point to 2.0 percent. Most of thspan are expecting it is more or less sufficient in the current scenario in light of first quarter data
The minutes from the Federal Open Market Committee meeting held in March gave a downbeat assessment of the US economy leaving the possibility of further cuts in US interest rates intact. The minutes also showed that many board mspanbers believed a recession in the first half of 2008 was likely amid declining economic growth and financial market stress.
The University of Michigan/Reuters' consumer sentiment index declined to 62.6 in April from 69.5 in March.
Slightly encouraging data from the US Labor market released on Thursday supported the dollar along with weak German Business Sentiment data that affected the euro.
German Ifo economic institute s business climate index dropped to 102.4 in April the lowest level in two years from 104.8 in March.
According to the release by US Labor Department on Thursday initial claims for state unspanployment benefits fell sharply by 33 000 to 342 000 for the week ended April 19 against the expectations for a modest rise. The four week moving average of initial jobless claims fell by 7 250 to stand at 369 500.
Continuing claims too recorded a fall by 65 000 to 2.93 million for the week ended April 12. But the four week average of continuing claims rose 20 500 to 2.96 million to the highest level since May 2004.
However weakness in the housing market continued as sales of new homes fell 8.5 percent to a seasonally adjusted annual rate of 526 000 in March as per the report by US Commerce Department.
Last week the National Association of Realtors had reported a 2 % drop in sales of existing single family homes and condominiums in March to a seasonally adjusted annualized rate of 4.93 million.
Also according to the Office of Federal Housing Enterprise Oversight US home prices fell 2.4 % for the 12 months ending in February.
Earlier the unexpectedly weak result from the Bank of America had dampened the investors in the banking sector and also added to concerns about the US economy. Bank of America the second largest bank in US reported a fall in first quarter profit due to write downs and rising credit losses.
US consumer confidence had sunk to its lowest level in 26 years in early April according to a report from University of Michigan/Reuters. The US consumer sentiment index fell to 63.2 in early April from 69.5 in March.
In a separate release the US Commerce Department revealed the nation's trade deficit expanded unexpectedly by 5.7% to $62.3 billion in February.
As expected the European Central Bank had left the interest rates unchanged while the Bank of England cut its benchmark interest rate by 25 basis points to 5 percent.Medium Term OutlookExpecting a short term recovery in dollar if it sustains below 1.5725 Supports are 1.5909 1.6148 1.6420. Resistances are 1.555 1.5380 1.5220 and 1.5110. But if it trades above 1.5910 more weakness can be expected. In spot dollar closed at 1.5659 (1.5623) against the euro after trading in the range 1.5592 1.5692.Last day DEUR June traded in the range 156.53 155.67 and closed at 156.16.
Spot Dollar vs Euro
TECHNICAL OUTLOOK (Intra day)
DEUR (June) Bullish above 156.33 bearish below 155.88
DATA TO WATCH
2008 April 28
National HPI Composite 20 y/y
Dubai time = GMT +4 hours