Weak Stocks and Concerns over US Financial Firms Weaken Dollar

Daily Forex Fundamentals | Written by CMS Forex | Jul 28 08 20:35 GMT |

NZ Trade Balance in June Similar to May, Both Exports and Imports Decrease In New Zealand, the trade balance figure showed only a slight change in June from May, posting a deficit of 200 million dollars. Both exports and imports were down compared to May, which kept the trade balance similar to May's levels. Expectations were for a bigger deficit. AUS Business Expectations Fall for 3rd Quarter In Australia, the NAB business expectations index fell to -8 for the 3rd quarter. That's the lowest reading since the June quarter of 1991, and the index is down 18 points in the past year. Falling consumer confidence, rising borrowing costs, and volatility in stocks are all weighing down business expectations. GER GfK Consumer Confidence Hits 2.1 For August, Lowest in 5 Years The GFK German consumer confidence index fell to 2.1 for the August period, continuing its downward trend. It's the lowest level for the index since June 2003. The main gripe is inflation, and with the ECB hiking rates this month, consumer loans are now also going to be more expensive. EUR/USD - Euro Gains Modestly vs Dollar on Concerns over US Financial Institutions The Euro-Dollar pair continued its upward bounce seen the last 2 sessions, brushing off the weaker consumer confidence figure. The pair bounced off key support at 1.5650 last week. Today's action was pretty quiet with the pair climbing around 70 pips from its session open to its intraday high. The Dollar is being pressured by concerns over US financial companies' losses and the reduced chance that the Fed will move to raise rates in September. UK House Prices Fall 4.4% Compared to a Year Ago, Hometrack Says In the UK, housing prices were down 4.4% in England and Wales compared to a year ago, according to Hometrack. That's the deepest annual decline the survey has experienced since its inception in 2001. For the month, prices were down 1.2% in July compared to June. It's the 10th straight month of declines. GBP/USD - Pound Shruggs Off Housing Data to Gain on Rate Outlook The Pound-Dollar pair hit a session-low of 1.9850 overnight, following the weak housing report. However as overnight trading gave way to the NY session, the pair climbed 120 pips to test the 1.9970 area. USD/JPY - Weak US Stocks Halt Advance of Dollar vs Yen, Resistance at 108.00 Holds US stocks opened weaker on Monday. The Dow Jones index was down 150 points in early afternoon trading as oil prices jumped. Risk aversion stopped the Dollar-Yen pair at the 108 level. Resistance held and the pair fell to 107.40 by 1 PM EST. USD/CAD - Loonie Continues its Fall Vs Greenback, Reaches 1.0225 One pair where there was greenback strength was the US Dollar-Canadian Dollar. For the 5th session in a row the pair climbed higher, testing 1.0225, the high set in early July. Since testing parity last Tuesday the pair has rallied 225 pips, mainly on falling oil prices, one of Canada's main exports. Upcoming Releases Tonight, Japan releases data on household spending, retail sales, and unemployment. New Zealand will post its number of building approvals while Australia reveals its leading index. Overnight, Germany posts preliminary CPI data for July, Switzerland reveals its UBS consumption indicator, and the UK releases data on mortgage approvals, consumer lending, and a survey of retail activity. Tomorrow morning, the US will post reports on housing prices and consumer confidence. Capital Market Services, L.L.C. www.cmsfx.com ©C2004-2005 Globicus International, Inc. and Capital Market Services, L.L.C. Any information in this report is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Capital Market Services, L.L.C. with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. Capital Market Services, L.L.C. accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this report. No part of this report may be reproduced or distributed in any manner without the permission of Capital Market Services, L.L.C.