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Rough ride for the dollar

Further reports that citigroup would be reporting heavy Q2 wrtiedowns combined with Oil trading at $140  and gold breaking the $910 resistance level and jobless claims dissappointing at 384k meant cable broke the resistance level of 1.9850 with major stops being filled meant this morning it has held ionto its gains seeing a high of 1.9888. Against the euro we saw a two week high of 1.5768 in early morning uk trading after closing at 1.5755 in New York.

The Australian Dollar (AUD) traded above 0.9600 briefly as Gold surged back above $900. The Aussie was unable to hold at these levels as increasing risk saw unwinding of the carry trade with massive AUD/JPY selling putting pressure on the AUD/USD. 

Looking ahead today, Euro zone Consumer sentiment forecasted at -16 for June and German Retail sales for May expected at 0.5%. ECB President Trichet is also scheduled to speak.  Also released is the final Revised Michigan Consumer Confidence figure expected at 57. Also UK Q1 GDP is forecast at 0.4% and Q1 Current account expected at -12 Billion. 

BOE governor Mervyn King said he expected inflation back to 2% next year and although he expected it to hit 4% this year this was a temporary spike. He cited the rising cost of oil as a major factor as this was fuelling price rises and making it difficult to control the cost of living. The head of OPEC commented yesterday saying the price of oil could hit between $ 150-170 this summer citing the devaluation of the dollar as a major factor.

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