Rate dynamics and recommendations on EUR-USD and GBP-USD. by OpenForex.com

Rate dynamics and recommendations on EUR-USD and GBP-USD.

19:06 05/30/2004

Rate dynamics and recommendations on EUR-USD and GBP-USD. The dollar had declined again prior to Memorial Day holiday in the U.S. Market players are afraid of two things: militant acts that might take place on the territory of the U.S. on Memorial Day on Monday, May 31 and that OPEK would not raise oil extraction quotes. In case of further rise of prices for oil, FRS U.S. won’t have an opportunity to raise the rates. Negative fundamental data on the U.S. economy put significant pressure on the dollar. April consumer spending growth was the minimal in the last 6 months in the U.S., having made up 0.3%. Meanwhile, income rose 0.6%. Experts had looked for 0.2% gain and 0.5% gain respectively. Income rise made up 0.4% in March, whereas spending rose 0.5% (initially reported as 0.4% rise). The reason of spending slowing down was reduction in demand for cars, clothes and non-durable goods. “Refinancing games are over, tax reduction influence goes off and the cost of oil and gas produce oppressing effect, - says Michael Gregory of BMO Nesbitt Burns. - However, non-farm payrolls rise compensates a bit”. Disposable income rose 0.5% after having risen 0.4% in March. Inflationary adjusted spending rose 0.2% in April after 0.3% gains in March. The weakness of the above-mentioned indexes was proved by the release of Michigan sentiments index and Chicago Federal Reserve’s measure of consumer sentiments. Michigan sentiments index components came out lower than expected. Michigan sentiments index was expected to come out as 81,6 against 87.3 in April. Current conditions of the given index are 103.6 against 105.0 in April; Michigan sentiments index is 90.2 against 94.2 in April. Chicago Federal Reserve’s measure components are of contradictory nature: - business activity index of Chicago’s FRS was the highest since January 1988; - business activity index of Chicago’s FRS – prices paid – 80.0 against 76.1 in April; - business activity index of Chicago’s FRS – new orders – 74.4 against 65.1 in April; - business activity index of Chicago’s FRS – employment – 54.8 against 50.9 in April; - business activity index of Chicago’s FRS: 68.0 against 63.9 in April. Recommendations: EUR and GBP trend continuation is very likely. Stick to the previous recommendations. Recommendations: EUR and GBP trend continuation is very likely. Stick to the previous recommendations.

The forecast was created by trans1.