The market continues to fluctuate and varies in movement as investors assess the outlook for the global economic recovery. Despite the fragile and volatile sentiment prevailing today, the common denominator is still a weak US dollar!
The dollar remains weak versus its rivals, especially as fundamentals recently have been proving a slowing pace of recovery in the US opposed to a better than expected performance in Europe in particular which was understated due to the debt crisis.
We can see greenback trending lower ahead of an expected weak income report despite the expected rebound in pending home sales, yet the market is more focused on the jobs fiesta later this week, which is also expected to reflect the slowing pace of recovery in the US as the jobs recovery is still subdued. The dollar index is trading lower versus the six major trading partners recording so far the lowest at 80.46 and the highest at 81.03.
Meanwhile, the euro continues on trending higher on the back of the weak dollar despite the weak PPI, as the manufacturing figures yesterday and the services tomorrow are still good indications for ongoing recovery, especially as investors are upbeat regarding Trichet's comments in the press conference following the decision later this week. The pair head to the upside before consolidating upon the expected 1.3105 areas, where it managed to reach the first expected technical target at 1.3250 where still it's fluctuating around this resistance, recording so far the high of 1.3261.
As for sterling, it also continue to the upside despite the reported drop in construction activity, which surely was hammered by the ongoing uncertainty and tighter lending amid the new austerity measures, expired stimulus measure, and of course the debt crisis. The pair bounced off early lows at 1.5859 to reach the high so far at 1.5962.
Meanwhile, the Japanese yen continues to hold the upper hand versus the dollar, especially as investors remain jittery regarding the prospects for the global recovery, especially as other nations start to provide signs of slowing, especially as the RBA today left rates steady for the third month. The USDJPY pair so far is trading bearishly declining from the highs recorded at 86.65 to the low set at 85.77 and currently hovering near those areas around 85.87.