FOREX Daily Outlook by Easy-Forex.com

Bernanke not worried over weaker than expected data for US GDP, Chicago PMI and New Home Sales, Manufacturing ISM set for release                    

CURRENCY TRADING SUMMARY – 01 MARCH 07 (23:30GMT)
                                   

• U.S. Dollar Trading (USD) Comments from Fed Chairman Bernanke, who said it is “reasonable” to expect stronger growth later in the year, lent some support to the dollar. Bernanke also played down the impact of a global plunge in stock prices on Tuesday, as the US Dollar rebounded last night despite further disappointing economic data. Beginning with the Chicago PMI which came in at 47.9 (forecasted: 50, previous: 48.8) showed a further contraction of business activity in the Midwest. In other news, economic growth in the form of the GDP (Q4, 2^nd release) dropped from the previous 3.5% to 2.2%. Finally new home sales also came in softer falling by 16.6%. In US share markets indexes were moderately higher, steadying after the previous session’s tumble, which was the biggest since the Sept. 11, 2001 attacks on the US. The NASDAQ rose by 8.29 points (0.34%) and the Dow Jones also rose by 52.39 points (0.42%). Crude Oil rose slightly by US$0.32 a barrel to US$61.78. Looking ahead, Core PCE prices are out with expectations at 0.2% with the pervious at 0.1%. However the most interesting piece of data due out would be in the form of ISM manufacturing with markets expecting a figure of 50 slightly up on the previous 49.3. With the recent poor releases of manufacturing indices markets will be awaiting the ISM with caution.          

• The Euro (EUR) dropped 0.1% from two month highs against the USD of 1.3260 seen on Wednesday largely on the back of poor US data. Unemployment rate came in slightly better than expected at 7.4%. Core CPI came in as expected at 1.8%. Overall, the Euro traded within a range of a low 1.3181 and a high of 1.3242 before closing 1.3234 by the end of the New York session. Looking ahead, Manufacturing PMI out of the Eurozone is expected to come in slightly higher at 55.8 (previous: 55.5).
• The Japanese Yen (JPY) surrendered previous day explosive gains, to drop 0.4% on the day. Data released for the day were PMI manufacturing: 53 (previous 53.4), Retail Sales: -0.8, Industrial Output: -1.5. Overall the JPY traded within a range of a low 117.93 and a high of 118.84 before closing the day at 118.40.     
• The Sterling (GBP) ticked up against the Euro and steadied versus the dollar as markets stabilized after the previous day’s sharp sell-off and weaker than expected US growth numbers weighted the greenback. Gfk consumer confidence unexpectedly fell to -8 for the month of February as expected. Overall, the GBP traded within a range of a low 1.9516 and a high of 1.9641 before closing the day at 1.9638 by the end of the New York session.  
• The Australian Dollar (AUD) was relatively stable on Wednesday. Overall, the AUD traded within a range of a low 0.7858 and a high 0.7894 before closing at 0.7880 by the End of the New York session.
• Gold (XAU) gold fell by an astounding US$14.40 an ounce to 672.80 as investors looked to take profit in a volatile environment. 
• The Czech Crown (CZK) The Czech crown regained ground on Wednesday, rebounding from a 5-month low seen overnight as central European currency markets stabilized and investors appeared to unwind yield-dependent trades funded in crown. The crown gained 0.3% from the previous domestic close to a one-week high of 28.300 per Euro.

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