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Strategies & Market Trends : Aardvark Adventures -- Ignore unavailable to you. Want to Upgrade?

To: ~digs who wrote (1274)	8/3/2005 7:34:42 PM
From: ~digs	Respond to of 7944

Dollar’s Exhaustion Breaks Technicals forexnews.com The dollar fell across the board, breaching below 5 month channel support against the euro to a 2-month low and even hitting an 8-week low against the sterling on the even of a likely Bank of England rate cut. The US currency dropped well before the services ISM survey showed a bigger than expected decline in July. The services ISM report slipped to 60.5 last month from 62.2, while the new orders rose to 61.9 from 59.5. The good news for the job market is that the employment index edged up to 56.2 from 57.4. Nonetheless, currency markets are increasingly shifting from being hesitant in rewarding the US currency to becoming negatively biased towards it. Neither the strong data on US manufacturing (ISM’s manufacturing index hit 7-month high in July) nor the 0.8% increase in personal consumption has provided a lasting boost to the US dollar. Even the rise in the Federal Reserve’s preferred indicator of inflation as measured by the core PCE price index to 1.9% in the year ending in June, failed to lift the dollar on higher inflationary expectations. The figure neared the 2% limit of the central bank’s comfort zone. Thus, although the aforementioned reports suggest that there is increasingly little in the way of economic data to stand in the way of the Fed’s tightening campaign, currency traders remain unimpressed. That is partly because of improved economic fundamentals in the Eurozone and eroding chances of an ECB interest rate cut. Today’s release of the Eurozone services PMI showed an increase to 53.5 in July from June’s 53.1, while Germany’s own services PMI jumped to 53.8 from 52.3 in June. Even Italy’s ailing services sector showed some hope when its index hit 50.0 in July, showing expansion for the first time in 4 months. The renewed rally in commodities is also weighing on the US currency as markets expect further revaluations from China down the horizon. Gold is making its 6th daily consecutive gain hitting a 4-week high at $435.60 per ounce, while oil is at a record high at $62.40 per barrel. With gold surging, copper just off yesterday’s record high of $3,588 per tonne, the commodity currencies of Australia, Canada and Norway should maintain their boost. USD vs EUR chart .. forexnews.com