Dollar recovered from record low against the Euro after soft economic data and comments from European policymakers
Dollar recovered from record low against the Euro after soft economic data and comments from European policymakers indicated that the weaker US currency is hurting euro zone economic growth. Investors awaited German corporate sentiments data for further clues on the health of the economy in the euro zone.
But weak data form US is holding the greenback in the lower range against the major currencies.
The National Association of Realtors 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.
Unexpectedly weak result from the Bank of America on Monday dampened the investors in the banking sector and also renewed 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. Net income fell to $1.21 billion or 23 cents per share.
Also last week Citigroup the largest U.S. bank posted a quarterly loss of $5.1 billion and pretax write downs of $6.0 billion. But shares in the company rose as investors were appeased by efforts being made to get past its credit problspans and drive down costs. However consecutive losses in the banking giants dampened the investors sentiments and ultimately affected the greenback.
The US Commerce Department revealed the nation's trade deficit expanded unexpectedly by 5.7% to $62.3 billion in February.
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.
Federal Reserve Chairman Ben Bernanke in testimony to Congress had said that the outlook for US economic growth had worsened since January and the possibility of a recession could not be ruled out.
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 1.5889 (1.5987) against the euro after trading in the range 1.5999 1.5858.Last day DEUR June traded in the range 159.60 158.30 and closed at 158.56.
Spot Dollar vs Euro
TECHNICAL OUTLOOK (Intra day)
DEUR (June) Bullish above 159.03 bearish below 158.57
DATA TO WATCH
2008 April 24
Core Durable Goods Orders m/m
Durable Goods Orders m/m
New Home Sales
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