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16 June, 2008
Forexgen Client Services
The dollar continued to remain under pressure as the trade
deficit increased in the month of February. Even though everyone was
looking for the weaker dollar to help boost trade, I forecasted an
increase in the deficit because the previous drop in the ISM
manufacturing index told us that it would be weak (Forecasting News)
Jobless claims also dropped sharply but the improvement is
primarily due to the Easter Calendar effect. I still expect claims for
unemployment to rise especially since continuing claims remain at very
high levels.
Not only is the US dollar trading at a record low against the
Euro, but it also slipped below 7 Chinese Yuan. With this big
psychological barrier breached, the G7’s criticism towards China’s
currency regime will be limited.
Nothing has changed and if anything, ECB President Trichet has
confirmed his hawkishness. US retail sales are due for release next
week and with Linens ‘n Things joining Domain, Fortunoff, and Sharper
Image in filing for bankruptcy protection, consumer spending will
contract for another month. Crude oil and gasoline prices have also hit
a record high which is going to hurt consumer spending further.
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