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US Dollar Forecast Bearish on Clear Downward Momentum.

US Dollar Forecast Bearish on Clear Downward Momentum Fundamental Outlook for US Dollar: Bullish - US Dollar hits new lows, but do fundamentals support declines? - Greenback greenback, in U.S. history, legal tender notes unsecured by specie (coin). In 1862, under the exigencies of the Civil War, the U.S. government first issued legal tender notes (popularly called greenbacks) that were placed on a par with notes backed by specie.  falls against Euro for six consecutive trading days - Forex Forex

See: Foreign exchange
 sentiment points to further US Dollar declines The US Dollar dropped like a stone on its way to fresh 2009 highs against nearly all major forex counterparts, breaking its long-standing trading range Trading Range

The spread between the high and low prices traded during a period of time.

When a stock breaks through or falls below its trading range after several days of trading in a range, it usually means there is momentum (positive or negative) building.
 against the Euro in fairly dramatic fashion. The first full week of post-summer trading finally brought the sustained price moves we have long been waiting for. FX Trading volume Trading volume

The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares.
 increased notably through mid-week trade and fueled US Dollar losses, but fundamental "justification" for renewed US Dollar weakness was far less clear. According to FXCM FXCM Forex Capital Markets  execution desk data, open interest in the Euro/US Dollar jumped by as much as 20 percent before the week was through. A busy economic calendar in the week ahead suggests that the US Dollar may remain volatile, and it will be critical to see whether its recent downtrend downtrend

A series of price declines in a security or the general market. Many analysts feel that investors should avoid securities in a downtrend until the pattern is broken. Compare uptrend.
 may be sustained. Demand for the safe-haven US Dollar dropped sharply on the week as the US S&P 500 and other major risk barometers reached fresh year-to-date peaks, and overall momentum favors USD USD

In currencies, this is the abbreviation for the U.S. Dollar.

The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion.
 losses. Indeed, forex options markets show that option traders are betting on further US Dollar weakness against almost all major counterparts. Yet those same options prices show short-term volatility expectations have dropped to their lowest levels in the past year. The fact that US Dollar weakness has not coincided with a general rise in forex volatility expectations suggests that currencies could return to sideways trading, but this will likewise depend on developments in financial market risk appetite. The 20-day correlation between the Euro/US Dollar and S&P 500 currently trades almost exactly at record-highs. To that effect, traders should keep close tabs on S&P 500 reactions to the coming week of key US event risk. Highlights will likely include the historically market-moving Advance Retail Sales, Consumer Price Index, and Treasury International Capital System reports. Consensus forecasts call for a noteworthy pickup in domestic Retail Sales, but the expected surge is mostly a function of the highly-publicized "Cash for Clunkers" program that strongly boosted Auto Sales Auto Sales

The major producers of domestic automobiles report sales monthly. These numbers are seasonally adjusted by the U.S. Department of Commerce and are available to the public one to five business days after the end of each month.
. Traders should instead watch for surprises out of the "Ex Autos and Gasoline" figure-predicted to gain a paltry 0.1 percent on the month. If numbers prove better than expected, the S&P will likely rally and the US Dollar may actually decline. The following day's Consumer Price Index numbers are less likely to force major US Dollar volatility, but traders should nonetheless keep an eye out for any especially large deviations from consensus expectations. The true fireworks fireworks: see pyrotechnics.

Explosives or combustibles used for display. Of ancient Chinese origin, fireworks evidently developed out of military rockets and explosive missiles and accompanied the spread of military explosives westward to
 may come on subsequent Treasury International Capital System (TICS) data. Analysts have long argued that massive US fiscal deficits could harm the US Dollar as the government floods markets with debt securities. Yet recent data shows that foreign demand for US Treasury bonds remains robust, and the US Dollar has thus far averted disaster. It remains important to watch for continued demand for Treasuries, and any disappointments could further fuel dollar losses. Momentum plainly favors further US Dollar weakness, but key event risk in the week ahead could prove pivotal in deciding near-term direction for the downtrodden down·trod·den  
Oppressed; tyrannized.


oppressed and lacking the will to resist

Adj. 1.
 currency. - DR For more timely FX market analysis, visit our newly-launched Forex Stream Service. .

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Publication:Mena Report
Date:Sep 12, 2009
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