Money Trading with FOREX

Well, happy Memorial Day everyone! As you can see this weekly wrapup was delayed a few days, but take a quick look for review anyway. Here is the end of week FOREX update for May 23, 2008 on Money Trading FOREX. The dollar saw its sharpest decline in 2 months today against other major currencies due largely to record high oil prices leaving the U.S. economy vulnerable to slower growth and rising inflation. This exacerbates the fact that the US consumer market is already under stress from the housing crunch. Interest rates will likely remain low in the U.S. for the time being despite rising inflation, and that may be a likely indicator that the dollar will remain weak.

The dollar pared losses against the yen on Friday after slightly better than expected U.S. existing home sales data for April. The U.S. dollar was trading slightly weaker in mid-morning trade in Sydney on Friday. There was an overnight dollar rally on stronger job numbers and falling oil price, but that ran out of steam rather quickly.

The euro barely escaped losing ground and remained mostly stable despite data showing tepid growth in the euro zone’s manufacturing and services sectors. Analysts feel that despite the slowdown, the economy is still strong enough to allow the European Central Bank to focus on restraining price pressures. Euro zone PMI figures counter 1Q GDP and show the slowest rate of growth in five years. While in the United Kingdom there is no revision to headline UK growth figures. Even so, consumer spending has risen to an 8 year high while business investment sunk to a 4 year low.

It’s been a very big week for the British pound, which rallied more than 300 pips against the US dollar. There were some upswing surprises in economic data and some rather hawkish comments from the latest monetary policy meeting which may signal that it could well be months before FOREX traders see another rate cut from the Bank of England.

Rising commodities have been the story of the week helping to take the Australian, New Zealand and Canadian dollars higher. The Australian dollar rose to a 24 year high, setting itself within an arm’s length of hitting parity with the US dollar. On a similar note, rising inflationary pressures and stronger economic data suggests the RBA is much closer to an interest rate hike than any of the other major central banks.

Also as has been the trend lately, FOREX reserves in India have risen by over 1 billion dollars.

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