Daily Forex Fundamentals | Written by Crown Forex | Aug 19 08 07:23 GMT |
Major Market Mover: Housing & Confidence

Views altered, markets used to see the Zone and Royal as a safe economies to withhold their currency but with what is occurring in the financial markets and the gloomy outlook market participants had changed their minds. Now they perceive the US dollar safer than others, they demand in increasing but the long last fear which was left a side is getting back, yet with no effect at the time being…

Earlier today, the Japanese Central Bank decided to hold rates steady at 0.50%, as they are in no shape of hiking or cutting rates; there economy is tumbling and growth is heading south affected like other economies by the surging oil and raw material prices, as Japan is considered to be one of the highly industrialized economies in the world.

Moving to the Zone, a center for European economic research is going to release today some confidence data; expert's confidence might have been dipping down south as they don't have an optimistic outlook any more. The German ZEW current situation expectation stands at 10 in August from the previous 17 levels, but the experts believe the economic sentiment would ease slightly to -62.0 from the previous -63.9.

Though prices remain elevated, high raw material and oil prices continue to weigh on producers pushing them to hike their prices just to compensate some of the high expenses they are facing, even when oil prices eased slightly at the end of July prices remained heading to the upside, but those prices must be easing in August because oil prices plunged heavily so if producer did not consider taking their prices down they would continue to increase the pressures on the Union inflationary levels.

But before we end today's session we have got some important US fundamentals, from inflation and the housing sector, as those two subjects remain the main reason behind all the feds confusion.

No signs that the hosing markets had reached to a bottom yet, the housing starts might have plunged in July to 960 thousand as the median estimate clears out, though pessimistic analysts expects to see lower levels almost at 875 thousand believing that the threats of unemployment will continue to weigh on the citizens making them more hesitant to block their in the current deteriorating market. But other expectations points out that the housing starts had continued to grow reaching to 1040 thousand; also the expectation of the Permits falls in a wide range but the median estimate falls at 970 thousand coming to worse than the previous.

So if the Housing Starts and Permits come to better than expectation the US dollar will appreciate against all majors, taking the positive data as sign of recovery in the housing markets; but if data comes to inline with expectations or worse the dollar will depreciate which restore back the fear in the US economy from more falls in the housing sector which would cripple their economy.

In a whole different report and an indicator of inflation levels, the producer price index might be showing prices in July rose just 0.6% from the previous rise of 1.8% on the month, but on the year it will continue to be to the upside.

Mitigating rising inflationary levels is hard at the time being, the feds are not being able to hike rates just to salvage their economy from rising consumer prices which were triggered by the surging oil prices obligating producer to hike their prices just to compensate from the expenses.

But if prices ease as expectations in July and the housing markets starts to recover the US economy would be in an appropriate stage, giving more space for the feds to starting thinking about a rate hike if an only if inflation in August will continue to be elevated especially after raw material and oil prices eased.

The issue of Fannie Mae and Freddie Mac is not over yet, as they did not surpass the critical stage, now they are trying to raise capital just to compensate from the severe losses that halted upon them. Those two governmentally supported mortgage companies came at the end to announce their failure in front of all markets as they couldn't bear the falling housing prices any more. If those two companies achieve in transcending this obstacle markets can officially say that the US economy is on the road of recovery.

Economies are still tumbling, with some on the verge of starting to recover and others on the edge of falling, and we my dear reader we are just sitting to watch when this tragic movie will be over to live safely without facing a fear of more spillovers.

Crown Forex

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