USD’s Bullish Move returns

Last week, the USD went through a bullish trend against most of its currency counterparts. The greenback gained around 400 pips versus the EUR, trading at under 1.43 on Friday. The USD also saw big gains against the GBP and CHF. The USD did experience some bearishness against the JPY towards the end of the week, due worse than-forecasted economic data from the US against the JPY’s positive momentum. The USD took advantage of its currency rivals’ bearishness last week, as the EUR couldn’t catch a break with a batch of bad economic releases. The USD also gained momentum from Hurricane Gustav’s-less-than expected effect on the US and the oil companies, which drove down the crude oil prices. There were also a few American economic releases that supported the USD, as the Factory Orders, ISM Non-Manufacturing PMI and Total Vehicle Sales all beat forecasts. Traders should notice that towards the end of the trading week, the USD started to slightly lose value as worse than forecasted results from the Non-Farm Employment Change and Unemployment Rate caught up with the greenback.

This week could end the USD’s bullishness as the American stock markets’ values have been dropping and the financial crisis seems to continue. Over the weekend, it was announced that the US Government seized control of mortgage giants Fannie Mae and Freddie Mac. This will take a toll on the USD as the Treasury Department said it was prepared to put up as much as $100 billion over time in each of the companies if needed to keep them from going broke. In terms of economic data releases this week, the very important Pending Home Sales will be announced on Tuesday and are expected to fall to a negative rate, the Trade Balance, PPI and Core Retails Sales are expected to decrease as well. Traders should pay attention to Fed Chairman, Bernake’s speech which is due on Tuesday at the White House Initiative on Historic Black Colleges and Universities, in Washington DC. Overall it seems like the greenback could lose its recent gains against its major counterparts this week.

Traders should expect a fairly volatile opening of the market today as traders are still grasping the effects of the US Government’s control of Fannie Mae and Freddie Mac, as well as the data that was released towards the end of last week that had shockwaves slowly hit the USD. Later today should be more stable for the greenback as there will only be one release of economic data, the Consumer Credit, which is expected to be lower than last month. Some volatility might be seen after Federal Reserve Bank of Dallas President Richard Fisher’s speech in Austin with questions expected from the audience.