Also supporting the markets was the decision to extend the FED Primary Dealer Credit Facility until Jan 30 plus other steps aimed at boosting liquidity. This could be viewed negatively as the fed is being forced to take additional measures to deal with the credit crunch that continues and is still intensifying .A fall in US crude inventories lead to a sharp rally in Oil and capped the USD gains. Crude Oil closed up $4.58 ending the New York session at $122.19 per barrel. Looking ahead, weekly Jobless claims seen at 395K and Advanced Q2 GDP seen at 2.2% up from 1.0% in Q1.
The Euro fell initially on the US data but rebounded to opening levels on a rally in Crude Oil. Euro zone Consumer Confidence came in weak as predicted at -20 dampening hopes of any more interest rate rises going into the future. Overall the EUR/USD traded with a low of 1.5522 and a high of 1.5617Looking ahead, German Unemployment Change seen at -20K after -38K in June. Also released the July Inflation Report is forecasted to gain to 4.1% from 4.0% last month.
Sterling (GBP) kept to a trading range with US data preceding the day's lows before recovering inline with the rally in Crude Oil. July GFK Consumer Confidence fell to -39 it's lowest ever recorded with concerns of stagflation mounting. Overall the GBP/USD traded with a low of 1.9745 and a high of 1.9844 before closing the day at 1.9810 in the New York session.
There was an oil price rally on the back USA weekly inventory figures which showed an unexpected drop in petrol supplies, after 3 weeks of heavy selling had knocked 15% off oil prices. However crude inventories did not fall as much as expected they were down 100,000 versus a prediction of 1.6m barrels. A senior trader added that also the market has been selling on rallies rather than buying on dips.