Dollar Continues to Rally across the G10

Daily Forex Fundamentals | Written by AC-Markets | Jul 23 08 20:19 GMT |

Dollar Continues to Rally across the G10 The Usd rose in the European session based on a continued decline in oil prices and light volatility. The EurUsd traded down over 100 pips to 1.56, while the UsdJpy rose to the high 107 price. The GbpUsd is slightly off its early high of 2.00 at 1.99, based on a persistent trend of dollar strength. Equity markets traded higher in the US and Europe based on lower oil prices and a string of positive corporate earnings. Bond Traders continue to sell govt. securities in a migration back to riskier component of the market. In addition, commodities fell across the board with oil trading lower at 124 and gold lower by nearly $30 at 920 setting the stage for a Usd rally. Industrial production fell in the Eurozone to -3.5% vs. -4.4% expected, although the data beat expectations, it was still negative. The overall manufacturing outlook for the region is increasingly pessimistic, which is consistent with the recent trend in deteriorating growth. Inflationary pressure is weakening a bit on the back of lower oil prices, which would give the ECB room to possibly hold next meeting. We project the EurUsd to see a floor of 1.56 in the near-term and resistance around the 1.59 level. These ranges are likely to act as a sliding scale in tandem with oil prices due to the high degree of correlation. The BoE held rates at 5.00% despite severe growth issues in the UK, which gave the cable strength early on in the trading session. The central bank noted recent increases in inflation, but was not prepared to hike rates considering the weakness in the overall UK economy. The GbpUsd should remain trade between 1.98 and 2.00 in the near term. US Financial markets rallied on weaker oil prices and gave way for the dollar to rally across most of the G10. Risk appetite is increasing, which is reflected in the recent rally in equities and sell off in the treasuries. If the housing sector starts to stabilize we can expect a strong move to the upside in the Usd, and a clearer picture of what the Fed will be willing to do in their next meeting. AC Markets http://www.ac-markets.com Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment. buy or sell?