Written by Terri Belkas and David Song, DailyFX.com
The US dollar gained against most of the major currencies ahead of the market moving data scheduled for tomorrow, and pushed investors to lower their risk appetite as they raised bets of a 25bp rate cut. As a result, the greenback advanced against most of the commodity currencies expect for the Canadian dollar, which held up amid falling oil prices. The low yielding Yen also strengthened against the US dollar – sparked by a rise in risk aversion, while the Swiss franc inched lower to trade at 1.03. The European currencies continued to lose ground against the US dollar as negative sales data for the UK and Euro-Zone lowered the growth prospects for both countries and pulled back the British Pound and Euro to 1.96 and 1.55, respectively.
Fresh housing data lowered the growth prospects for the US economy as downside risks continued to surface, with more consumers voicing their concerns about the current economic situation. The S&P/CaseShiller Composite fell 12.7 percent, the sharpest decline since record keeping began in 2001. Financial instability paired with tightening credit conditions has made it increasingly difficult for the housing market to get back on its feet, with home prices persistently falling as the inventory of unsold homes reached record levels. Falling consumer confidence has also added damped the growth prospects for the economy as the Conference Board’s Consumer Confidence index fell for the fourth consecutive month to dip to a five year low of 62.3 from 64.5. Consumers continue to feel the economic strains as raging food and energy costs limit their spending capabilities, with growth prospects looking increasingly bleak as economic activity deteriorates. Read more…
