Tuesday 6th May 2008
The USD fell yesterday for the first time in 3 days as oil prices hit a record high and despite a rise in April in the US services sector (April ISM at 52.0 against March 49.6). However a Fed survey showed the banking sector remained in the grips of a credit crunch and more corporate fallout is expected.
Also weighing on the USD were comments yesterday from ECB's Trichet who again warned of 'significant inflation risks' suggesting that benchmark rates would likely stay at 4 per cent when the central bank meets this Thursday. Consumer prices in the EZ rose by 3.3 per cent in the 12 months to April below the prior months reading but still well above the ECB's target of 2 per cent.
So no 'green light' yet for the US economy and this rising oil price is a big global worry particularly on an economy struggling in recession.
Following the model and not being greedy with profit!