US DOLLAR HOLDS TO GAINS FROM TWO WEEK LOW AHEAD OF FED
DATE: 24/04/2012
US dollar is holding on to its recent gains as a break from two week low extended further today amid thin moves with investors awaiting the FOMC statement tomorrow. There is likely to be some shift in the FOMC rhetoric about the introduction of quantitative easing in the light of the latest flurry of weak housing and labor market indicators. However, a clear view of the Fed's scrutiny of economic environment would emerge only after the meet and the press conference following it.
Meanwhile, yesterday, the Federal Deposit Insurance Corp projected that bank failures will cost the agency $12 billion for the five years ending in 2016. The agency made the estimate in a report providing new details about its deposit insurance fund, a pool of capital funded by fees paid by banks and used to protect depositors when institutions fail. He added that banks would provide more than $65 billion in revenue to the FDIC over the next five years, more than five times what the agency expects in failure costs.
The Euro was slammed from highs above 1.3200 as Eurozone private sector activity contracted to a 5-month low in April, indicating a sharp deceleration in economic activity at the start of the second quarter. The German Central Bank Bundesbank stated that German economy is currently lacking momentum, even though it's in good shape overall.
Clubbed with this, political uncertainty in Europe also affected sentiments as French President Nicolas Sarkozy lost the first round of his re-election bid. Dollar is currently quoting at 1.3166 against the Euro. In technical terms, the pair looks headed down as the recent rally failed to test the EMA 100 on daily charts and we could expect a move down towards 1.3000 in the current week.
POWERED BY: COMMODITY INSIGHTS
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