The US dollar continued to rise against the Euro on Friday despite very weak consumer confidence data. EUR/USD fell more than 100 pips from yesterday’s mid-1.5600, past expected bear target of 1.5600 to a session low of 1.5550 today.
Since this level marks the support of another trendline, we could see some Euro rebound from here for the time being. And as anticipated, USD/CHF achieved initial bull targets after breaking above 1.0300 yesterday, hitting resistance around 1.0430 before bouncing down.
There were hardly any economic releases out today except for the US final Michigan sentiment survey, which showed the overall index falling to 62.6, from 69.5 in March. This final figure was even worse than the preliminary estimate of 63.2 reported two weeks ago. The April current conditions index fell to 77.0 from 84.2 in March, while the expectations index fell to 53.3 in April, from 60.1 in the previous month. US consumers haven’t been feeling this downbeat about their financial situation and anxious since March 1982, which was 26 years ago.
High gasoline prices are also causing some people to make fewer trips to the shopping mall, with the average price of regular unleaded gasoline rising to a record $3.58 a gallon yesterday according to the AAA.
Spend to Help the Economy
Back to the results of the survey: About 9 out of 10 respondents believe the US economy is now in recession. US president Bush said today tax rebates through the fiscal stimulus plan will help the US economy emerge from the slowdown, but he may be unrealistically over-hopeful, like some other market observers. According to the same Michigan survey, many are expecting to use the government rebate checks to settle part of their debt or hoard them as savings - which isn’t something the government wants Americans to do.
Oil prices are rising past $118 per barrel again following reports of further US-Iran tensions - it was reported that the US Navy fired warning shots on fast boats off the Iranian coast. There are also interruptions to oil production in Nigeria due to militant attacks on a pipeline and a union strike.