The U.S session was rather supportive for the dollar’s gains as it continued to trade higher supported by the better than expected fundamentals. Retail sales rose to a three year high supported indeed by auto sales which is a remarkable sight for the U.S economy after the dilemma seen with Chrysler and GM, while manufacturing activity continued to improve as the abiding recession is leveling out the de-stocking which has hammered the sector in exactly a year ago from today.
The dismays of Lehman Brothers failure has intensified the global financial crisis and steepened the recession, yet a year after that day was seen, the day the American policy makers thought they needed an escape goat and a lesson to Wall Street which has proved to be a very harsh one. The outlook is brighter now yet still the course is to highly challenging and though the dollar was capable of commemorating the year that passed which marked a milestone in U.S history.
This sentiment was rather the dominant in the market and powered the dollar to indulge into its much needed correction, as greenback was heavily oversold, and as the data came better than expected from the U.S economy the gains spread, though rising equities are now offsetting the dollar’s glory.
Europe’s single currency was influenced as the dollar heading the correction that was highly needed, especially as confidence in Germany and the euro zone, though increased yet trailed estimates. The pair is still moving to the downside though momentum indicators over intraday basis are providing mixed signals which might increase the volatility, breaching the current areas around 1.4480 and trading lower with closing over four-hour basis below that area, which is the 10 and 20 4H MA, will help the pair extend the movement south towards 1.4516.
As for sterling, it moved aggressively to the downside after BoE’s King hinted the possibility of monetary lowering interest paid on commercial reserves. The pair breached the ascending trend line to extend the downside move further especially with trading below 50 4H MA around 1.6505 the pair now faces 1.6390 areas which might be capable of slowing the downside move.
Meanwhile, the USDJPY was also generally trending higher in today’s trading, and now has started to show sings of intraday reversal to the downside, especially as the pair reached overbought areas which might trigger the downside move; the pair is to retest 90.80 areas and might extend further towards 90.60 levels.