Monday, 3 Aug 2009

Dollar Drops to Lowest Level Since the Collapse of Lehman Brothers

The USD fell to its lowest levels this year on Monday after the release of the ISM Manufacturing PMI, which showed U.S manufacturing improved more than expected in July. This report was one of a number of reports that showed manufacturing around the world is picking up. Better than expected earnings reports as well as the rise in Crude Oil prices further intensified the Dollar's drop.

The Pound jumped to the highest level since October versus the Dollar as HSBC Holdings Plc reported an unexpected profit and the British Manufacturing PMI showed better than expected results. The GBP reached a high of 1.6986 against the USD following the release.

Crude prices have greatly benefited from the prospect of return to growth in the next quarter, reaching as high as $72 a barrel on hopes of increased demand. However, fundamentals were still not strong enough to support prices above $72 and currently Oil is trading around $71.50.

Looking ahead to tomorrow, the bearish trend on the Dollar is likely to continue as several economic indicators are expected to show further improvement; including the British Halifax HPI and U.S Pending Home Sales at 12:30 GMT.