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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: Real Man who wrote (14318)	11/11/2008 11:15:00 AM
From: Slumdog	Respond to of 71475

US Dollar: Why the Lack of Reaction to Friday’s Dismal US Employment Data? The US dollar may have ended the day lower versus most of the majors, but the moves came primarily during the Asian and European trading sessions and were not necessarily the result of the abysmal US non-farm payrolls (NFPs) numbers released at 8:30 ET. In fact, though the announcement of NFPs initially sparked major volatility for the US dollar and led it slightly lower, trading eventually quieted down and the currency actually ended the day higher versus the euro and British Pound from the time of the release. Focusing on economic data, US NFPs fell negative for the tenth consecutive month in October by a whopping 240K, while the September reading was revised from -159K to -284K. In all, this brings the job loss tally for the 2008 calendar year to 1.179 million and has propelled the US unemployment rate to a 14-year high of 6.5 percent. These figures are disappointing in their own right and suggest that the economy at large is in trouble, which was only confirmed by Robert Hall, the economist who leads the NBER's business cycle dating committee, who said that the evidence of recession is "more than compelling" and that it was "conclusive" in his personal opinion. Given the lack of reaction from the greenback, it’s fair to say that much of this gloomy data has already been priced in to the currency, and right now, the forex markets are more concerned with risk trends and the deteriorating fundamentals of Europe. Looking ahead to next week, this is likely to remain the case but traders should still watch out for the big US event risk on Friday, when US Advance Retail Sales will be released and when Federal Reserve Chairman Bernanke will speak. Advance Retail Sales are expected to show that the index fell for the fourth month in a row in October, with consensus forecasts by Bloomberg News calling for a 2.0 percent decline. However, given the contraction in the International Council of Shopping Centers’ (ICSC) index for the first time since March 2008 and the plunge in consumer confidence to a record low, there’s quite a bit of downside risk for this particular Advance Retail Sales release. At the same time, Federal Reserve Chairman Ben Bernanke and European Central Bank President Jean-Claude Trichet are scheduled to speak at an ECB conference in Frankfurt. Comments by these two men tend to be extremely market-moving for not only currencies, but bonds and equities as well. If the central bank chiefs issue bearish rhetoric that spooks investors, the news could weigh heavily on carry trades and propel low-yielding currencies like the US dollar and Japanese yen higher. dailyfx.com