EURUSD, GBPUSD. US consumer sentiment disappointed market. by OpenForex.com

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EURUSD, GBPUSD. US consumer sentiment disappointed market.

20:21 04/02/2007

Core news for market on Friday became data on consumer sentiment of University of Michigan. This market indicator is not especially significant for forex traders and such reaction to it on Friday showed once again how much market is charged against the dollar. Traders are ready to sell the dollar after any negative news over the USA.

The index of confidence of American consumers calculated by Michigan University, fell to half year lows to 88,4 points in March from 91,3 points in February. Concern by rise in petrol prices and slower rise in incomes of families became the main reason of falling of consumer sentiment. The index of current conditions reflecting Americans' opinion about current economical situation, dipped by 3,2 points to 103,5 points in March. But Americans estimate especially negatively the prospects of economical development. The index of consumer expectations dropped to the lowest level for last 6 months to a minimum 78.7 downwards from 81.5 last month.

At the same time European index of consumer confidence grew to 112,2 points in March in comparison with the same indicator in February - 109,7 points. Consumer market in Japan also demonstrates good results - indicator of household expenses grew over Japan by 1,3% in March.

Japanese economy keeps growing at moderate, but stable rates, Japanese Bank executive Tosikhito Fukui said. He informed on necessity of rise in rates of potential growth of Japan and carrying out of reforms in budgetary sphere.

All these factors put pressure on the dollar, as show that EU and Japanese economies increase in comparison with American one, which is almost at stagnation.

However the power of bear impulse on the dollar was limited a little after an issue of positive data over the USA, which showed the rise in consumer expenses, total volume of construction spending and unexpected rise in Chicago PMI.

According to the US Department of Commerce Households incomes and expenses grew by 0,6%. Construction spending increased by 0,3%, having showed the highest rise of expenses for last 11 months.

Mark Vitner, a senior economist at Wachovia noted "this year will be not bad for builders".

Chicago PMI grew unexpectedly. The index rose in March up to 61,7 points that is the highest indicator for last two years. This value is 13,8 points above the same February indicators.

ECB President Trichet declared on Friday that the euro rate did not prevent employment rise in Eurozone. Nevertheless in Eurozone there are necessary further structural reforms, as labor productivity in the region is lower than in other industrially developed countries, including the USA. Speaking at press conference organized by Aspen Institute Italia Trichet noted that since the single European currency was introduced in countries of Eurozone there were created 12 bln. new workplaces. Trichet declared that his words did not mean that a creation of new work[places was stimulated only by introduction of single European currency, but he did not agree with those who consider that euro introduction will affect negatively indicators of employment rise. As for labor productivity Trichet said that "carrying out of structural reforms is quite necessary" for separate countries and for Eurozone as a whole.

As a whole market moods keep being not in favor of the dollar, today there is expected publication of first ISM index over the USA in a new April season. Market expects today drop in this index in March in comparison with February by 1,3 points to 51,0 from 52,3. If market expectation is justified the uptrend on euro will proceed. However while refrain from trade, as unexpectedly strong rise in Chicago PMI puzzled a little bit market and can dampen negative data of ISM index.