The Dollar weakened this week and is nearing towards its yearly lows again. Existing Home Sales rose to 5.24M, higher than 5.03M forecast. The steep rise came according to economists' statements that the housing market has reached its bottom and the recession is easing. Fed Chairman Bernanke gave an optimistic outlook for the economy, saying the economy is starting to rise from its bottom sending the Dollar and Yen lower. NASDAQ and Dow Jones rallied by 4.66% and 4.06%. Crude Oil rose by 4.25% closing at 73.9$ a barrel as better economic conditions mean higher demand. Gold (XAU) rose by 1.67% closing at 953$. Looking ahead, Consumer Confidence on Tuesday and New Home Sales on Wednesday will give expected to give more evidence as to whether the economy is really stepping out of the recession. The Prelim GDP and Unemployment Claims on Thursday will give more indications of the economy's health. Personal Income and Personal Spending are supposed to show improvement on Friday. The Dollar is expected to keep weakening if the economic data will continue to be positive as it will no longer be needed as a safe haven and investors will continue to seek higher yielding assets.
The Euro rallied versus the Dollar as it bounced off from the 1.405 level back to its resistance at 1.435 following the Dollar weakness and strong fundamental data. German Zew Economic Sentiment came out better than expected reaching its highest level in 3 years. German Services and French Manufacturing PMI rose above the 50 level, showing growth for the first time in more than a year. Overall, EUR/USD traded with a high of 1.4376 and a low of 1.4045 Looking ahead, in order to sustain its rally and breach above its yearly highs investors are looking forward for more positive economic data that will signal the recession is easing and cause more investors to switch from the Safe Haven of the Dollar and Yen into higher yielding assets such as the Euro. German Ifo Business Climate is expected higher at 89.1 versus 87.3 prior on Wednesday. On Thursday, GFK German Consumer Climate is expected at 3.8 higher than 3.5 prior. European Consumer Confidence will be released on Friday and is expected to be higher at -21 versus -23 prior.
The Pound remained almost unchanged versus the Dollar as the Dollar weakened broadly against most currencies but weak economic data in England was released. The CPI was released better at 1.8% versus 1.5% expected. The Pound dropped during the week after BOE's Minutes were released. The Minutes showed the committee's vote for the addition to the asset purchase program wasn't unanimous, as some of the members wanted to increase the asset purchasing program by more. UK Government debt deficit rose by 8 billion pounds, which raised fears for future taxation that will limit growth .Overall, GBP/USD traded with a high of 1.6624 and a low of 1.6275. Looking ahead, the BBA Loans for House Purchase are expected better on Tuesday. CBI Realized Sales are expected higher at -11 versus -15 prior. The Revised GDP will be released on Friday and is expected to remain at -0.8%.