Dollar on Friday 25 July

Upbeat Data Props USD
by Korman Tam
The greenback was higher in the Friday session, rallying near the 108-level against the yen and 1.5650 versus the euro on the heels of better than expected US economic reports. The data released today consisted of June durable goods orders, new home sales and the July University of Michigan sentiment survey, all of which exceeded consensus estimates.

The headline durable goods orders report increased by 0.8%, beating calls for a 0.3% decline and up from a flat reading from May, while the excluding transportations figure shot up by 2.0%, reversing the 0.8% decline a month earlier. The University of Michigan sentiment survey improved by larger than expected jumping to 61.2 and sharply improving from its 28-year low in June at 56.4. Meanwhile, new home sales also jumped to 530k units in June, edging out consensus estimates of a decline to 500k units from 512k units from May.

A combination of weak data overseas and better than expected reports from the US helped prop the dollar to one-month highs against the yen and near two-week highs versus the euro. The economic calendar for next week will provide additional news for traders to digest to gauge the state of the US economy. The reports consist of July consumer confidence, Q2 GDP, employment cost index, PCE, weekly jobless claims, Chicago PMI, July non-farm payrolls, unemployment rate, and manufacturing ISM. The US economy is seen expanding by 1.9% in the second quarter, improving from 1.0% previously. The July manufacturing ISM is estimated to bode poorly for the economy, falling beneath the key 50-level which distinguishes between expansion and contraction to 49.8, versus 50.2 a month earlier. The key highlight will be Friday's July jobs report, with the unemployment rate expected to edge back higher to 5.6% from 5.5% a month earlier.

GBPJPY

GBPJPY
SHORT position at 212.40
STOP LOSS above 213.00 (- 60 pips).
THE TARGETS are 211.60 / 210.20
OP, SL & TP at your own risks

News 25 July 2008

GBPJPY . GBPUSD . USDJPY

Dollar Rises

Dollar Rises to Four-Week High as Fannie, Freddie Plan Advances
July 23 (Bloomberg) -- The dollar rose to a four-week high against the yen and advanced versus the euro as a U.S. government rescue of Fannie Mae and Freddie Mac moved closer to congressional passage and oil prices fell.

The Yen Drops

JPY Falls on Downgrade, USD Edges Higher
by Korman Tam
The greenback was higher against the euro and yen, rising to 1.5669 and 107.90, respectively. The dollar continues to benefit from further declines in oil, which fell to $123.63 per barrel, and renewed confidence stemming from government measures to support Fannie Mae and Freddie Mac.

Hawkish Fed commentary has also propped the currency higher. The Fed's Plosser reiterated his view that current interest rates at 2% are pretty low and ultimately, rates have to go up. He said it was important to protect the Fed's credibility by reinforcing its commitment to low inflation through action. Plosser added that it would be too late if the Fed waited for inflation expectations to become unanchored.

Markets will look ahead to Thursday's economic reports consisting of weekly jobless claims and existing home sales. Weekly jobless claims are estimated to increase to 375k, up from 366k a week earlier. Existing home sales are seen slipping to 4.93 million in June units versus 4.99 million units a month earlier.

The Dollar

Dollar Advances as Paulson Stresses Support for U.S. Currency

July 22 (Bloomberg) -- The dollar rose the most against the euro in almost a week as Treasury Secretary Henry Paulson voiced support for the currency and the Federal Reserve Bank of Philadelphia president said interest rates should be raised.