Tuesday, November 25, 2014

The Good, the Bad and the Ugly US Dollar on today's session

You can feel yourself as the most handsome, the smartest and the fastest guy in the planet when suddenly someone comes and gives you a blow. Well, that happened today with the US dollar. The greenback couldn't make it on the US GDP and even it lost ground versus majors.

Let's see the fundamental data: The US GDP was revised upwards to 3.9% in Q3 from an initial figure of 3.5%. The data took everyone by surprise as the market expected a downward revision to 3.3%. Result: The dollar rose against major competitors.

However, the Richmond Fed Manufacturing reported an ugly number since the index fell to 4 in November; the lowest since June. The services component dropped to 25 but the real scary were the manufacturing shipments that collapsed to 1 from 23. Then consumer confidence fell to 88.7 in November; below expectations and the lowest number since June. In addition, the October data was revised to 94.1 from 94.5. Then the dollar began to fall.

The bad $USD:

The $EUR/USD advanced for second day as the pair extended its recovery from November 25 low of 1.2355. The pair rose 0.26% on the day before closing at 1.2475. I must say, the bulls do not give up. According to Valeria Bednari, "despite the dominant bearish trend, short term risk has then turned to the upside, with a break above 1.2520 exposing the highs in the 1.2560/70 price zone."

The $GBP/USD finished flat on the day after falling to 1.5645 but also rallying to 1.5734. Finally, the Cable closed at 1.5705. The pair's upside is contained by November 17 and 20 highs at 1.5735.

The $USD/JPY seems to have returned to that consolidation patterns performed earlier this year, but with wider ranges. The USD/JPY moved sideways around 118.00 and closed 0.24% down on the day at 117.95. 

The good $USD:

The $USD/RUB climbed 2.55% on the day; the $USD/NOK advanced 0.44%; the $NZD/USD fell 0.67% and the $AUD/USD dropped 1.03%. 

Are you asking for the ugly $USD? Let's wait for the next week and the US jobs report to see which direction will take the $USD.

On commodities, crude oil collapsed to lows since November 14 at $73.85 amid news from the OPEC mini meeting. Russia, Saudi Arabia, Mexico and Venezuela will monitor oil prices and will meet regularly. However, no agreement on any output cut.

Gold initially fell to 1,190.40 after US GDP, however the metal bounced off to close above 1,200.00 amid $USD weakness.

On stocks,the Dow Jones declined 2.96 points or 0.02% to finish the day at 17,814.94. The S&P 500 eased 2.38 pts or 0.12% to end at 2,067.03; while the Nasdaq Composite advanced 3.36pts or 0.07% to 4,758.25.