Forex News: Dollar Slumps on Cooling Economy Speculation
Forex News04:00 E-12 November German IFO Expectations (exp 98.8, prev 99.2) November German IFO Current Assessment (exp 112, prev 111.8) November German IFO Business Climate (exp 105.2, prev 105.3)
The greenback weakened after economic advisers to President George Bush yesterday cur their forecasts for economic growth next year. The Council of Economic Advisers said in their semi-annual forecast that a cooling housing market will bring U.S. economic growth slow down in 2007. They forecasted that GDP would increase 2.9% in 2007, slower than the June's forecast of 3.6%. The downward revision of economic forecast dampened sentiment on the dollar.
A report released early in US session turned out to be weak and finally triggered a dollar slump after two days'consolidation. U.S. weekly initial claims climbed from 308k to 321k, worse than the forecast for a reading of 310k.
The dollar extended losses following a weaker than expected reading of U.S. consumer sentiment in November. University of Michigan consumer sentiment by the end of November fell from the preliminary reading of 92.3 to 92.1, below the expectation of 93.0. The dollar was weakened to a 5-month low at 1.2956 against the euro and dropped more than 1 cent to session low at 117.38 versus the yen.
The move today may be exaggerated during this low volume trading session before thanksgiving holiday. The trading is likely to be pretty light in the rest of the holiday week. Economic data worth noting are German IFO survey due Thursday and UK third quarter GDP due this Friday.
EURUSD will face interim resistance at 1.2950, followed by 1.2980 and 1.30. Additional ceilings will emerge at 1.3050, backed by 1.31. Support starts at 1.29, backed by 1.2870, 1.2840 and 1.28. Subsequent floors are eyed at 1.2750.
posted by Kalin Tasev @ 2:50 AM
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