The dollar posted its biggest losses through the past week after the Fed has dropped its benchmark rate to 4.75%, mainly due to the biggest housing slump which threatens to weaken the U.S economy. The USD fell to a record low against the EUR and tested the weakest since 1976 vs. the CAD on speculation that the Federal Reserve will continue to reduce U.S. interest rates. The housing crisis is not over and the Fed is likely to lower interest rates again before the end of the year as the economy comes to a standstill.
This week the USD may extend its losses as reports are expected to show declines in Home Sales, Durable Goods and Consumer Confidence. The expectations for the Existing Home Sales release are currently standing at 5.50M, slightly down from the previous month’s figure of 5.75M. On Wednesday, The Durable Goods Orders figure is expected to be released in negative territory at -3.5%, while the core figure is expected to be released at -0.8% which would be a significant drop from last month’s figure 3.7%.
The consumer data, which includes Consumer Confidence, Personal Spending and Personal Income, is also expected to weaken. On Friday, the Chicago Purchasing Managers’ Index will provide traders with a picture of the health of manufacturing in the Midwest and will also be a benchmark for near future trading sentiments.
Although the calendar appears to several major events, it is likely that none of it will be aggressive enough to create a shift in market behavior, as the negative momentum on the USD appears to be stronger than ever.
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