Dollar dips on weaker than expected economic data


Weaker than expected economic data out of the US sent the US Dollar lower as currency traders took the view that while the ECB are certain to raise rates in the Euro-zone, the certainty that the Federal Reserve will raise rates at their next meeting on March 28 has diminished. Much of the US Dollars gains of the past few days have disappeared. The Japanese Yen strengthened further. The National Association of Purchasing Management ( NAPM )-Chicago reported that its index of Midwest business activity fell to 54.9 in February from 58.5 in January, falling short of analysts' expectations for an unchanged reading. US January Existing Home Sales fell 2.8 pct in January to a seasonally adjusted annualized rate of 6.56 mln, the lowest in two years. Figures from the Conference Board showed US consumer confidence in February ended a three-month gaining streak , falling to 101.7 from a revised January level of 106.8 expectations had been for a statistic of 104.8.There was further bad news in the data with the expectations index falling to 83.3 in February from 92.1 in January. February's data was the lowest since March 2003.
The Euro closed the European trading session around the 1.1920 level, reaching the short term objective of the day traders. Forex traders will now have an objective of 1.2000, so long as a close of 1.1910 in New York can be achieved. Only a close below 1.1865 would signal further Euro strength against the US Dollar with a near term objective of 1.1810 then 1.1778. The Japanese Yen continues to benefit from US Dollar weakness closing around the 115.85 level. Support is likely to be tested at 115.55 with an objective of 114.80. The British Pound benefited from weaker than expected data and a CBI report that showed lukewarm activity. Cable traders closed out the European session near the highs for the day, at 1.7540. Sterling has an objective for the day traders at 1.7570 then 1.7610. Only a closing session trade below 1.7460 will reverse the trend. The Swiss Franc closed the day just above 1.3100. Fx traders would be looking for the Swiss Franc bulls to test 1.3025 next.