Thursday, 30 Dec 2010

US Economy Continues to Show Improvement

A barrage of positive US data helped to boost the dollar versus the yen. However, as the day went on most of gains were eroded with the greenback trading down versus the majors.

Following strong economic data from the US the dollar was weaker on the day. Weekly unemployment claims came in better than expectations and reached a level not seen since pre-financial crisis times. Only 388k new unemployment claims were filed with economists expecting 416k. November pending home sales were stronger, rising 3.5% on expectations of a 1.8% rise. Also manufacturing numbers were up with the Chicago PMI rising to 68.6 from last month's number of 62.5.

The strong data continues to hint at an improving US economy that has consistently released improving economic numbers. The lone exception was the November non-farm payrolls.

The EUR/USD finished the day higher at 1.3282 after opening the day at 1.3233. The GBP/USD was down at 1.5420 following an opening day price of 1.5510. The USD/JPY reached as high as 81.85 before falling back towards its opening day price. At the end of the day the USD/JPY was up slightly at 81.50 after opening at 81.56. The USD/CHF was down sharply at 0.9350 from 0.9510.

Weekly crude oil inventory numbers disappointed traders with crude oil stocks falling -1.3m barrels on expectations of -2.8m. Following the worse than expected data, crude oil fell to $89.40 after opening the day at $91.26.

Tomorrow's final trading day of the year will offer limited liquidity as Japanese markets as well as German banks will be closed for the New Year holiday. High volatility is expected as traders attempt to eke out any last minute gains to boost their yearly returns.