DOLLAR- ROCK ON!!!!

Dollar has been ROCKIN ON!!!!! against EURO. As I write this report Dollar has gained 978 pips or 6% in a short span of one and a half months (from 16th July 2008: 1.5477 to 1.4499 on 3rd Sep 2008). Before 16th July 2008 the story was altogether different with Dollar loosing 1236 pips or 8% since the initiation of the year when it quoted at 1.4594. The reports which were earlier inclined towards the EURO have now started singing tones of rising Dollar. EURO has been off-color due to the frail reports from majors like Germany, France and Italy to name a few.

The purchasing manager’s index for the manufacturing sector in the euro zone rose to 47.6 in August from a reading of 47.4 in July, up slightly from an initial estimate of 47.5. The reading still indicates a contraction in the manufacturing sector. A figure of less than 50 means a majority of purchasing managers saw a decline in activity. August was the third consecutive month when the manufacturing activity was below 50. Germany along with France and Italy recorded the sharpest rates of contraction. Automobile Sales have also been lopsided. Car sales fell in Spain, Ireland and France in August, signaling that European consumers are delaying purchases of big-ticket goods.

Although, Euro zone Inflation has eased a bit in August. The euro zone's annual rate of inflation fell to 3.8% in August from 4% in July, adding to signs that price pressures are easing. The decline in the inflation rate was the first since March, although it remains above the European Central Bank's target of just below 2%. However, economists expect the inflation rate to fall further, with some forecasting that it will slip below 3% by the end of the year.

The decline in food and oil prices since June has had an immediate impact on inflation expectations, a key concern for the central bank. The commission's survey also recorded a slight pickup in consumer confidence, although it remains low. However, the Economic Sentiment Index that measures both business and consumer confidence fell again, to 88.8 from 89.5, its lowest level since March 2003.

Have a look at US, Orders for manufactured goods increased by more than expected in the month of July, according to a report released by the Department of Commerce, with the increase reflecting growth in orders for both durable and non-durable goods. The report showed that factory orders increased by 1.3 percent in July following an upwardly revised increase of 2.1 percent in June. Economists had expected orders to increase by about 0.8 percent compared to the 1.7 percent increase originally reported for the previous month.

Crude Oil prices have also been easing as the storm threats from Gustav being wiped out. The movement will be closely watched as few more tropical depressions will shape themselves in Hurricanes. One can say that till the time Crude Oil prices keep mum the Dollar is away from the heat. Nothing has changed on economic front in US. It is only the way we look at situations, earlier we were monitoring US now we are monitoring EURO. Till the time keep ROCKING ON with Dollar.