Dollar Falls on Housing Market Concerns

Daily Forex Fundamentals | Written by AC-Markets | Jul 28 08 20:28 GMT |

The Usd fell in the European session based on pessimism surrounding the current state of the housing market. The EurUsd traded nearly 50 pips higher at the mid 1.57 price, while the UsdJpy fell to the mid 107 area. The GbpUsd rebounded trading with a 1.99 handle based primarily on dollar weakness. Equity markets dropped sharply in both the US and Europe, as concerns regarding the credit markets prompted a selloff in financials. Commodities are trading marginally higher, and we haven’t seen any substantial move to the upside or downside during the trading session, with oil at 123 and gold at 928. Bond yields tightened substantially, as risk aversion returned the marketplace, as investors look for safety in more secure assets. German GfK consumer confidence came failed to meet expectations coming in at 2.1 vs. the consensus figure of 3.5. The drop in consumer confidence resulted in a slight retraction in the early part of the trading session, and solidifies the global softening in economic growth which has spread from the US to Europe. Economists are forecasting a 35% chance that the Eurozone will fall into a recession. Although the euro saw some weakness early on, the market was unwilling to liquidate their long EurUsd positions ahead of key financial data out of the US this week (GDP, Non-Farm Payrolls, and ISM Index). The EurUsd should stay rangebound between 1.56-1.59 in this week’s trading session, but we sustain our outlook for the EurUsd to move lower below the 1.50 price before year-end. The US financial markets experienced triple digit losses in the Dow today, based on credit market concerns. The IMF stated that “there is no end in sight to the housing slump,” and the market reacted in a move to aggressive selling across the board. The key economic data points which are scheduled to be announced this week, will weigh heavily on the Usd. The GDP and Non-Farm Payroll numbers will be critical in assessing what position the Fed will be in to tighten monetary policy. The market expectations for GDP are at 2.3%, any drastic variation up or down will have a significant impact the Usd. AC Markets http://www.ac-markets.com Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.