| 7/11/2008
3:54 PM: EUR/$..1.5924 $/JPY..106.38 GBP/$..1.9863
$/CHF..1.0162 AUD/$..0.9656 $/CAD..1.0099
Lingering Fears
hit Dollar
The greenback slumped in the Friday session amid
a combination of persistent concerns over the
solvency of Fannie Mae and Freddie Mac, and rallies
in the commodity markets, particularly oil trading
to $147 per barrel. The dollar plunged to a 25-year
low against the Australian dollar beyond the 0.97-level
to 0.9715 on the heels of surging commodity prices
and crept closer to its all-time low versus the
euro at 1.5846, shy of its record low at 1.6018.
Stronger than expected US economic reports failed
to prop the greenback higher as pessimism over
the stability of the financial markets continued
to plague both the currency and US equity markets.
The trade deficit unexpectedly narrowed in May
falling to $59.79 billion, beating estimates for
the deficit to expand to $62.5 billion from $60.9
billion a month earlier. The July University of
Michigan preliminary sentiment survey improved
to 56.6, beating calls for a decline to 55.5 from
56.4. The expectations component declined to 48.3,
albeit less than the estimated decline to 48.0
from 49.2.
Meanwhile, in another effort to temper market
fears about the stability of Fannie and Freddie,
reports began surfacing earlier that the Fed would
open its discount window for GSE¡¯s.
This follows a chorus of government officials
attesting to ¡°adequate capitalization¡±
of both agencies. Nonetheless, government officials
offered no indication that a bail-out would be
forthcoming.
Canadian reports released earlier today saw the
employment change in June fall by 5k, missing
calls for an increase by 10k from 8.4k in May.
The unemployment rate in June also crept up, rising
to 6.2% from 6.1% a month earlier.
Traders will focus on economic reports due out
next week including US PPI, retail sales, CPI,
real earnings, capacity utilization, industrial
production, Philadelphia Fed survey and housing
starts. Meanwhile, UK economic reports will continue
to provide further clues into the state of its
economy and whether a recession may be imminent.
The data consist of June CPI, RPI, RICS housing
survey, ILO unemployment rate, claimant count
and average earnings.
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