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Greenback oh greenback where shall thee be heading? That is now the consistent wonder upon investors’ minds. The dollar is acquiring back some of its losses and since all believe the dollar is to comeback and to do that with a roar jitters embed their decisions as they…

Consider whether it’s time to start longing the dollar for over the long-term. Majors are weakening against the dollar certainly as they are printing a weakening picture and the state of the U.S economy is of question here especially after the revision to the GDP and the flow of data from the heart of the economy that suggest the probability to markets that the economy is actually to pick up pace in the latter half of the year.

The sentiment is now directed to other economies as all assess the extent of damage and how deep the contagion has actually spread into their homelands. One sure thing is talking place is a sense of relief that oil prices have taken a dive, though still again revolves around the shot-term developments and not the general trend for oil which remains valid to the upside.

Inflation rising pressures has limited central bankers’ scope from adjusting their monetary stance towards slowing growth. The need for alteration varies among the three major banks in question for their economies have diverted situations and classifications. Let’s start with the second largest economy, Japan, early today they revealed that CPI in April fell short of the previous and expectations rising 0.8% while on the year still it fell 0.1% for now Shirakawa is withholding Fukui’s legacy and do not intend to take rates down though their economy is threatened to weaken further.

As for the most hawkish of all, the ECB, today’s the flash CPI estimate for May which is highly accredited in the market, is expected to rise once more to an annualized 3.5% which is added agony to the ECB. As Germany’s retail sales posted their second consecutive unexpected drop after yesterday we saw unemployment rising and today the aggregate rate for the 15 nations is expected unchanged at 7.1 percent. Inflation is truly the fear for the 15 nation economy as so far the slowing economy is affected the most by agonized consumers with lower disposable incomes and as Trichet said growth is ongoing yet on a slower pace and they are let’s face it one of the top performers in the face of a global slowdown, a worldwide credit crisis and an American fallout.

UK meanwhile, was surely the fastest to go down after the U.S as their money markets were highly exposed and they already suffered the same bubble in their economy, the properties bubble, which is imposing on them a new American scenario. The BoE lower rates by a total of 75 bp then held steady again affected by rising inflation. Today’s Gfk consumer confidence fell to the lowest level since 1990 at -29 as Britons see their economy also heading to a recession which King already stated as an option…

Where does that leave the notorious U.S economy the facts mentioned above have left major themselves weak, and now for the dollar supporting facts. The GDP revision yesterday was rather inline with expectations and still the support to the economy was not domestic factors as much as outsiders. For that still the concern is on the labor market, income, spending and confidence. Yesterday the jobless claims printed a weak picture especially as continuing claims hit the highest in four years ahead of the renowned Jobs report next week.

As for inflation on the quarter the Core PCE was revised lower yesterday, and today the feds favorite inflation gage is expected unchanged from the previous in April at 2.1% though sliding slightly on the month with a gain of 0.1%. While when it comes to the major component personal spending is expected to have slowed from March gaining 0.2% after 0.4% in tandem with the slow in income which is expected at 0.1% after 0.3% in March.

The manufacturing performance according to the Chicago PMI is expected with minor improvement at 48.5 after 48.3 yet still in contraction which surprisingly the least upbeat data is much more blown out of proportions! Michigan final is expected unrevised at 59.5 and let’s face it who blames them if we see the strong fluctuations and indicators from the heart of the economy and though we may differ among the interpretation to the state of the economy consumers are the one that actually feel it and they have certainly FELT THE RECESSION!!!

Since the crack of dawn and the day was busy and yet to get more hectic as we head to the weekend so stay tuned for further developments for the heat is just getting started and we are to assess if the dollar has really gotten the groove back or again another false break to and ongoing journey of weakness…

Crown Forex

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