The Dollar saw an extremely volatile session during last week's trading. The Dollar dropped to a 14-months low against the Euro, as the pair crossed the 1.50 level. However the Dollar appreciated against the Yen, and saw mix results against the Pound.
It appears that the mixed results of the major economic publications from the U.S economy could explain the irregular trading of the Dollar. On the positive side, the housing sector continues to recover. The Existing Home Sales, which are the number of residential buildings that were sold during September, rose to 5.57M from 5.37M on August. In addition, the Building Permits, which measures the number of new residential permits issued during September, remained at a high level as well.
Nevertheless, the Producer Price Index (PPI), a leading indicator of consumer inflation, failed to rise, and dropped by 0.6% in September. If the relatively low inflation rate fails to rise, it is a warning sign that the U.S economy may not recover as quickly as some may expect. In addition, the employment condition in the U.S continues to be fragile. The weekly Unemployment Claims showed that 531,000 individuals filed for employment insurance for the first time during the past week - the largest number in 3 weeks.
As for the week ahead, the most impacting data expected from the U.S economy looks to be the Consumer Confidence on Tuesday, the Durable Goods Order indices and the New Home Sales on Wednesday, the Unemployment Claims scheduled on Thursday. The results of these indicators are likely to determine the Dollar's direction for this week, and traders are advised to follow their results.