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Forex · News · Forex ForecastsNEWS / Forex Forecasts |
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Indicators of U.S. economic growth strengthen the dollar…Rate dynamics and recommendations on EUR-USD and GBP-USD.
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06:18 06/17/2004
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Indicators of U.S. economic growth strengthen the dollar…Rate dynamics and recommendations on EUR-USD and GBP-USD.
Alan Greenspan surprised investors, as he usually does. At first, when making a speech in London, he assured everyone that FRS would take more resolute measures to protect economy from overheating and inflation. In that connection he said that FRS rates would change more radically than earlier expected.
Later on, at the Senate meeting devoted to confirmation of his appointment as FRS chairman for the following (fifth) term, he said in reply to senators’ question about perspective actions of FRS that inflationary pressure would be of no serious concern in the nearest time. That is why they would be careful about deciding upon changing rate target. Thus, the head of the most influential financial institution of the U.S. counterbalanced the impact that his words might have on the market. Market reacted to both statements. Rally within 150-200 points up, as well as down, was recorded on all currency pairs.
Meanwhile, positive data on the U.S. economy is in favor of the dollar. FRS said industrial production rose 1.1% in May in the U.S. compared to April. Economists had looked for 0,8% gain. That is the highest indicator of monthly growth of production in the last 5 years.
Coefficient of industrial capacity rose 77.8% in May against forecasted 77.5% and the previous value of 77.1%. Let us remind that the given coefficient must not exceed 80% in the period of economic growth, thus showing existing economic reserves. Beige Book shows that consumer prices rise insignificantly, as commodity rise runs ahead of it. Average level of salaries also increases. That means that while commodities and money supply are under control, money savings’ rise compensates by consumer sentiments’ growth. However, it might result in credit prices’ rise.
Recommendations: EUR – from technical point of view, descending trend formed waves 1 on trend and wave 2 of correction. Positive data on U.S. economy can stimulate development of the strongest 3 trend wave, in case price overcomes key levels of support at 1,1970-1,1950. Recommendations are the same – keep long-term short.
GBP – the situation is similar. Key level of support is 1,800. Breaking this level out will be a good signal for the bears.
Recommendations: EUR – from technical point of view, descending trend formed waves 1 on trend and wave 2 of correction. Positive data on U.S. economy can stimulate development of the strongest 3 trend wave, in case price overcomes key levels of support at 1,1970-1,1950. Recommendations are the same – keep long-term short.
GBP – the situation is similar. Key level of support is 1,800. Breaking this level out will be a good signal for the bears.
The forecast was created by trans1.
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