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USD Tumbles Following Disappointing CPI Figure

Published Mar 19, 2012 at 12:35 - Countingpips

The US dollar reversed some of its recent gains to close out the week on Friday, following the release of a disappointing US Core CPI figure. The figure, which came in at 0.1%, led to investor doubts that US interest rates would go up previously than planned. As a result, the EUR/USD shot up then over 100 pips on Friday to close out the week at 1.3174. Turning to then week, a relative lack of news events means that the dollar could remain bearish for the nearly future. On the whole, US housing data, scheduled to be released on Wednesday and Friday, may give the greenback an possibility to recoup its recent losses.

Turning to this week, a lack of significant news events means that the dollar may not have many opportunities to reverse its current bearish trend. For all that, there are several indicators that may turn out to generate market volatility. US housing data, scheduled to be released on Wednesday and Friday, may signal furthermore gains in the American economic recovery. To boot, Thursday’s weekly Unemployment Claims figure is forecasted to show ongoing improvements in the labor sector. If true, the dollar could see gains as a result.

The euro saw significant gains against its safe-haven currency rivals to close out last week’s session. The EUR/USD reversed its downward trend on Friday, and gained then over 100 pips to close out the day at 1.3174. Against the Japanese yen, the euro was up close to 100 pips to close out the week at 109.92. Analysts attributed the common-currency’s reversal to disappointing news out of the US which caused investors to shift their funds away from the dollar and yen. That being said, the day was not all positive for the euro. The EUR/CHF maintained its bearish trend from Thursday to close out the week at 1.2060. Beginning on Thursday morning, the pair has dropped close to 100 pips.

Turning to this week, traders will want to note several potentially significant economic indicators out of the euro-zone. Thursday in particular could see heavy volatility, as manufacturing data out of Germany and France, the euro-zone’s two biggest economies, are scheduled to be released. Should the contingency arise, a speech from the ECB President may provide investors with additional insight into the current state of the euro-zone economic recovery. Meanwhile, the euro may see additional gains in the coming days if news out of the US once again comes in below analyst predictions.

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