Dollar Down to Weakest Level of 2009

The U.S. Dollar fell versus the EUR but clung to small gains against other major rivals on Monday. This came as traders turned their focus to data coming this week and as the EUR and Yen hit technical levels that triggered some buying. The market focus now shifts to a slew of U.S. indicators to be released between Tuesday and Thursday that could determine whether the Dollar will continue to trade lower, or experience a pause.

USD – Dollar Tumbles to 1-Year Low vs. EUR

The Dollar tumbled to a 1-year low vs. the EUR in Monday’s trading. However, the USD did make some gains against other currencies, despite the USD falling in early trading, as Monday was a very volatile trading day. The main factor that pushed the U.S. lower against the EUR yesterday was that U.S. stocks made significant gains, led by industrial and financial shares that helped the market prevail over an earlier slump. This led investors to drop the USD in some cases for higher yielding currencies and equities.

The EUR/USD pair closed higher by 70 pips at the 1.4614 level, which was slightly lower than the high reached yesterday of 1.4652. Obama’s speech about the U.S. financial rules overhaul on Monday helped the USD strengthen against several major currencies. The USD/JPY cross finished trading at 91.10, the first daily rise in a week-and-half. This all shows that the USD was unable to gain considerable strength yesterday, as no economic data was released from the U.S., which put the greenback on the backburner.

Looking ahead to today, there is expected to be much economic data released from the U.S. economy. Core Retail Sales, PPI and Retail Sales figures will be released simultaneously at 12:30 GMT. If the figures are better than expected, then this may lend a lot of support to the greenback. However, worse figures could send the USD lower again the EUR for a second day in a row. Later on, Treasury Secretary Timothy Geithner is expected to speak about the U.S. economy at 14:00 GMT. Any clues about future U.S. Interest Rates are likely to create to great volatility in the U.S. Dollar going into mid-week trading.

EUR – EUR Soars despite Poor Fundamentals

The Euro-Zone Industrial Production fell for a 2nd straight month in July, stressing the frailty of the Euro-Zone economic recovery. The data was -0.3% lower from the previous reading, sparking possible fears that European Central Bank (ECB) President Jean-Claude Trichet will raise Euro-Zone interest rates later than originally forecast. Yesterday, all of this actually led to a buy-up of the EUR, as the European currency’s safe-haven status returned to the forefront.

The EUR made significant inroads into the U.S. Dollar, as the pair rose to 1.4614 level, it’s highest in nearly a year. The EUR also gained against the GBP by nearly 50 pips, as investors favored the EUR over the British currency in yesterday’s trading. It seems that despite yesterday’s lack of confidence in Europe, the European currency seemed to act the opposite way to the equity market. The EUR marked its first bullish trading day vs. the JPY since Wednesday, as the cross closed significantly higher at the 133.20 level.

Today, the most significant release from the Euro-Zone will be the German ZEW Economic Statement at 9:00 GMT. This is expected to be the main source of volatility for the EUR in early trading, as it is a leading measure of economic health for both the German and Euro-Zone economies. From Britain, the main releases today are the CPI figures at 8:30 GMT and the Inflation Report Hearings at 8:45 GMT. Optimistic results may push the GBP significantly higher today. This would be a much needed boost for the Pound, as it seeks to reverse yesterday’s losses against its major currency crosses.

JPY – Yen Slips against the Majors

The Yen slipped against the majors on Monday, as Japan’s currency failed to extend its recent gains. It is important to note that the Yen has gone very bullish against its major currency pairs in recent days. Therefore, yesterday’s behavior may be a correction due to the JPY being overvalued lately. Also, investors dropped the JPY on Monday, as they seeked to make profits in higher yielding currencies and commodities such as Crude Oil.

In yesterday’s trading, the Yen fell by 70 pips against the USD to the 91.10 level. The Yen closed 110 pips lower against the GBP at the 151.33 level, Also, the EUR/JPY cross finished trading 175 pips higher at 133.20. Today, the JPY is set to move on news coming out of the major economies. If there are good figures from these countries, the Yen’s downward correction may continue.

OIL – Crude Oil Steady Bellow $69 a Barrel

Crude Oil closed higher by 55 cents, or nearly 1%, to make a mini comeback by closing at $69.05. This was despite being down for much of yesterday’s trading session. Crude was helped by the USD’s weakness on Monday, as investor’s seeked an alternative investment for higher returns. The black gold also gained due to higher confidence owed to President Obama’s speech on Monday over financial regulation.

Crude is set for another mouthwatering and volatile day of trading today. If the USD continues to collapse today, Crude may go higher. Also, Oil may also continue rising if there is an equity market rally led by the U.S. Oil seems undervalued lately, so you traders are advised to buy into this popular commodity now as today’s trading gets under way.

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