Calm as We Await...

The greenback remains weak against major currencies as the housing slump deepens while the soaring of crude oil prices continue to negatively affect growth in the US economy while upside risks to inflation remain as result of rising food and energy prices. The markets remain calm as we await the release of existing home sales later on this afternoon as sales are projected to decline even more, and if this case happens the USD will remain deteriorating since the US still did not find a bottom to the housing sector.

The Euro Zone released its PMI manufacturing advanced reading for the month of May coming in line with projections at 50.5 but still less than the prior reading of 50.7. As for the services reading, it declined to 50.6 from 52.0 while it was forecasted at 51.7. The composite advanced reading for May also slipped to 51.1 from both the expected and previous readings of 51.5 and 51.9 respectively. Although the service and manufacturing industries grew at the slowest pace since five years due to the massive rise in crude oil prices seen lately, the euro is neutral versus the falling greenback due to banks making it harder to lend companies money. The EUR/USD is currently traded at 1.5723 while recording a high of 1.5741 and a low of 1.5696.

The UK released its first quarter GDP preliminary reading coming in line with predicted and prior readings at 0.4% respectively. As these readings were widely expected in the market it did not move the market much while sterling is neutral too as it awaits for the release of the US fundamental data concerning home sales. The GBP/USD is currently traded at 1.9792 while recording a high of 1.9808 and a low of 1.9755.

Currently in the market people are lacking confidence as investors fear the market while they sell high yielding currencies and buy low yielding currencies in which we call unwinding of carry trades. The yen is finally rebounded gaining some of its losses witnessed the past couple of days at it gains against major currencies. The USD/JPY is traded at 103.62 while recording a high of 104.26 and a low of 103.46.

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