Dollar continued its weakness against the euro as a weaker than expected US durable goods report and job data boosted the concerns of more interest rate cuts next year.
According to the data US durable goods, such as computer and appliances, rose by only 0.1 percent in November, well below economists’ forecast.
The assassination of Pakistani opposition leader Benazir Bhutto also affected investors’ sentiments and attracted them to safe-haven assets like gold, adding to selling pressure in the dollar.
Initial jobless claims continued to inch higher, rising 1,000 to 349,000 for the week ended Dec. 22, the U.S. Labor Department announced Thursday.
Meanwhile, the number of continuing claims increased by 75,000 to 2.71 million for the week ended Dec. 15, the highest level for continuing claims since November 12, 2005.
But earlier data from the different sectors indicated a short-term recovery in the economy, easing concerns relating to the financial crisis and brought about a rally in dollar against the major currencies, since 23 November.
The Federal Reserve had cut its benchmark interest rate by a quarter of a percentage point on Dec 11
The Fed had announced a plan to increase liquidity and ease the global credit crunch situation by injecting billions of dollars in cash to the financial system in the next few weeks. This would be done in association with the European Central Bank, the Bank of England, the Swiss National Bank and the Bank of Canada.
Medium Term Outlook
1.4841 may act as the major support for the dollar. If dollar sustains below 1.4841 against the euro, more recovery can be expected. Active trading below 1.4530 is the sign of further strengthening of the dollar. Next resistances are 1.4400 and 1.4280. 1.4600 is a support. Continuation of the weakness in dollar can be expected only above 1.4841.
In the spot trading, dollar closed at 1.4611 (1.4492) against the euro, after trading in the range of 1.4640 – 1.4465.
Last day DEUR traded in the range 146.50 – 144.90 and closed at 146.47.
Intra-day trading ranges; supports are 145.33, 144.90. Resistances are 146.83, 147.28.
