Hello, it’s Tuesday August 02, 2011 and I’m
Martin Smith with the daily outlook from UFX Markets. The dollar strengthened against most of the
major currencies as the U.S. manufacturing index dropped more than forecast and investors
bet the debt accord President Obama and congressional leaders reached will dampen growth. The agreement
may have helped prevent a crash in the short term, but there’s still a lot to worry about.
The deal would raise the $14.3 trillion debt ceiling through 2012, cut spending by about
$1 trillion and call for enactment of a law shaving another $1.5 trillion from long-term
debt by 2021. The Stock Markets closed negative for a sixth day in a row as the Dow fell by
0.09% and the NASDAQ lost 0.43%. The main reason is weakening manufacturing growth spurring
concern the global economy may relapse into another recession. Crude oil fell by 1.75%
to a one-month low, closing at $95.30 a barrel, a clear sign economic expansion is faltering.
Gold (XAU) rose by 0.25%, closing at $1,620. The euro fell against the U.S Dollar after
Europe’s index of manufacturing growth cooled to 50.4 from 52 in June, the slowest pace
in 22 months. Also there is high concern about the debt crisis triggered by Greece spreading
to bigger nations, threatening the region’s economic recovery. Trading below the resistance
level of 1.4300 will keep the momentum negative for the pair, but if the pair breaks above
this it may reach 1.4480 again. Overall, the EUR/USD traded with a low of 1.4183 and a
high of 1.4453. Today, PPI is expected to grow by 0.1% vs. -0.2% previously. The Pound declined against the greenback after
a measure of manufacturing activity missed economists’ estimates. U.K. manufacturing
unexpectedly shrank the most in more than two years in July as Manufacturing PMI was
49.1. The trend is bearish if the pair maintains its resistance level of 1.6320 but should
it break this it may reach 1.6550. Overall, the GBP/USD traded with a low of 1.62236 and
a high of 1.6472. Today, Construction PMI is expected to show 53.2 vs. 53.6 previously. The dollar fell against the Yen due to risk
aversion, despite speculation that the Bank of Japan is ready to intervene in the foreign
exchange market to weaken the currency. A strong yen is the biggest uncertainty facing
Japan’s economic recovery. If the pair succeeds in breaking resistance of 78.00 it may bring
the pair to 78.80 once again. But if it maintains 77.60 the pair may reach new records. No economic
data is expected today. The Canadian Dollar declined against its U.S.
counterpart over concern that the U.S. economy, the main destination for Canadian exports,
is losing momentum. The trend for the pair is bullish. But if it breaks support of 0.9500
the trend will change. No economic data is expected today. Well, that’s all for today. Be sure to visit
us at UFXMarkets.com, your source for online trading.