UFXMarkets-Forex News-03-August-2011

UFXMarkets-Forex News-03-August-2011


Hello, it’s Wednesday, August 03, 2011,
and I’m Martin Smith with the daily outlook from UFX Markets.
The dollar strengthened against most of the major currencies as risk aversion intensified
and with stocks extending the slide. The debt-limit compromise passed by Congress and signed by
President Obama leaves the U.S. at further risk of a reduction in its top credit rating
if politicians don’t reduce the deficit. Moody’s Investors Service said today the
U.S. credit rating may be downgraded for the first time since 1917 on concern that fiscal
discipline may ease, further debt reduction measures won’t be adopted and the economy
may weaken. U.S. consumer spending unexpectedly dropped by 0.20% in June for the first time
in almost two years, adding to evidence that the slump in hiring is hurting household confidence.
Stock Markets closed negative as the Dow fell by 2.19% and the NASDAQ lost 2.75%. Crude
fell to a five-week low, closed at $93.20, and Gold (XAU) closed at $1,656.
The euro fell against the U.S Dollar as risk aversion persisted. In addition, there is
high concern about the debt crisis triggered by Greece may threaten the region’s economic
recovery. Trading below resistance of 1.4280 will keep the momentum negative for the pair.
Overall, the EUR/USD traded with a low of 1.4150 and a high of 1.4453. Today, Retail
Sales is expected to grow by 0.5% vs. -1.1% previously.
The Pound declined against the greenback after the pair failed to break it 1.6320 resistance
level. The trend is bearish provided it maintains its resistance of 1.6320. Overall, the GBP/USD
traded with a low of 1.6223 and a high of 1.6472. Today, Services PMI is expected to
show 53.3 vs. 53.9 previously. The dollar fell against Yen due to risk aversion
trading, despite ongoing speculation that the Bank of Japan is ready to intervene in
the foreign exchange market to weaken the currency. The 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 as a resistance
the pair may reach to new records. The Canadian Dollar declined against its U.S.
counterpart over concern that the global economy is slowing due to reduced demand for higher-yielding
assets. The trend for the pair is bullish. But if it breaks support of 0.9580 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.

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