ForexNewsNow Daily Market Outlook for February 24th, 2011

NEW YORK (Forex News Now) – Daily Market Overview – The U.S. Dollar lost considerable ground against all of the other major foreign currencies Wednesday, according to the daily forex news.

The Greenback traded sharply lower — despite continued risk aversion — largely due to rising commodity prices as unrest in the Middle East continued to influence world markets, with a particular focus on Libya. The Greenback fell as the price of gold rallied above $1,410 per ounce and crude oil traded over $100 per barrel on an estimated 25% reduction in production because of the situation in Libya. Strongman Muammar Gaddafi maintained control of the capital Tripoli, while fighting continues outside of the capital.

The U.S. Dollar also continued losing ground against most of the major currencies on Thursday, with the lone exception of Sterling. GBPUSD news showed that Cable was down considerably after reacting to a negative U.K. CBI Realized Sales number.

Furthermore, USD news showed the Greenback was weaker after the release of mixed economic data that included U.S. Durable Goods Orders and New Home Sales. Nevertheless, U.S. Initial Jobless Claims came out with a rather encouraging number, showing some improvement in the weak U.S. employment situation.

February 23^rd Important Economic Developments:

1. U.S. Home Sales Data Mixed – The Greenback was buoyed yesterday by an overall better than expected result in the closely watched U.S. Existing Home Sales data. The indicator rose to 5.36M sales compared with the 5.27M expected and the previous 5.22M number that was revised downward from 5.29M. Nevertheless, U.S. New Home Sales data released today was a disappointment to the market as it showed only 284K sales versus the 330K expected and the former 325K result that was revised down from 329K.
2. EURUSD Gains as European Industry Gains – EURUSD analysis showed that the Euro rose overall against the Greenback yesterday and early today after economic releases favored European industry. Specifically, Industrial New Orders for the Eurozone rose by +2.1% for the month, compared with the expected drop of -0.8% and the former +2.2% result that went unrevised. On the other hand, U.S. Core Durable Goods Orders fell by a disappointing -3.6% compared with the +0.4% gain expected, although this was largely compensated for by a large revision to the previous number from +0.5% to +3.0%. Also, Durable Goods Orders came out better than the +2.5% rise anticipated at +2.7%, and the former number was also revised up substantially to +2.5% versus the previous -0.4% release.
3. Swiss Franc and Oil Strengthens on Libyan Worries – The Swiss Franc improved to fresh highs versus the Greenback yesterday as a flight to quality driven by the ongoing Libyan crisis brought more risk averse funds into the perceived safe haven of Switzerland. USDCHF traded down to a fresh all time low of 0.9239 in the overnight session. Furthermore, threats by beleaguered Libyan leader Gaddafi to sabotage oil pipelines made purchasing a binary Crude Oil call option a more attractive strategy to benefit from a rise in oil prices while limiting downside risk to the premium paid.
4. Sterling Hits Recent Lows on Minutes and Poor CBI Realized Sales – Spencer Dale joined Sentence and Weale in dissenting for a rate hike in the latest MPC Meeting Minutes release in which the vote was split 3-0-6. Sterling initially spiked higher on this news, but gave back all of its gains and then some after the latest U.K. release of CBI Realized Sales showed that the closely watched indicator dropped to 6 from its previous 37 reading that was far below the market’s consensus of 30. An intraday GBPUSD analysis shows Cable dropped sharply on the day to an intraday low of 1.6084.
5. AUDUSD Higher With Gold but Economic Data Disappoints – The Australian Dollar traded higher to 1.0122 as the price of gold made a fresh recent impulsive high at 1418.09. Nevertheless, the Aussie’s strength was dampened by somewhat disappointing Construction Work Done data that came out up only +0.8% versus the consensus call for +1.5%. This lower than expected rise was largely compensated for by an upward revision to the previous -2.1% number to -1.5%. Also disappointing was Aussie Private Capital Expenditure data that only rose by +1.3% when the market was expecting a +2.5% gain, although previous number’s upward revision to 6.9% versus the previously released 6.2% mitigated the damage somewhat.

February 24^th Forex Events for Traders to Watch

1. The Libyan Crisis and its Effect on Gold and Oil – The ongoing Libyan political crisis will be closely watched by the market for signs of escalation that could boost the price of gold and/or oil significantly. Higher gold prices generally improve the AUDUSD rate, and by association NZDUSD, while higher oil prices tend to send USDCAD lower.
2. U.K.’s Dissenting MPC Members Speak – Two of the more hawkish rebels on the BOE’s Monetary Policy Committee are scheduled to speak today. First off, MPC Member Martin Weale will speak first in Oxford at the National Institute of Economic and Social Research (NIESR)’s seminar on the subject of Intergenerational Justice. Second to weight in will be Andrew Sentence, who is scheduled to speak in London at the Ashridge Alumni event. Cable could move either way depending on how the GBPUSD news reports their comments.
3. U.K. Gfk Consumer Confidence – This diffusion index is computed by Gfk NOP based on surveyed consumers, with levels above zero indicating optimism, and below that pessimism. This month’s release is expected to be -27, versus a previous reading of -29, and a higher than expected result could boost Sterling.
4. Japanese CPI Data – The important Tokyo Core CPI inflation indicator gauges the change in the price of goods and services that are bought by Tokyo consumers, with the exception of fresh food. This month’s release is expected to show a change of -0.3% y/y compared with the previous reading of -0.2%, and a result above forecast would tend to boost the Japanese Yen. The less significant National Core CPI is expected to fall by -0.3% y/y compared to last month’s -0.4% fall.
5. German Preliminary CPI – A closely watched indicator of German inflation, the German Preliminary CPI data measures the change in the price of consumer goods and services purchased in Germany. The preliminary data is released throughout the day, and is considered more significant than the final data released about 15 days later. German Preliminary CPI is currently expected to rise by +0.5% m/m compared with the previous month’s -0.4% fall that has been revised higher from the -0.5% initially reported. A higher number than expected will tend to positively affect EURUSD.