Dollar at Two Month Low Against Majors

The US dollar is currently at a two month low against a basket of major currencies. Positive second quarter data from Intel and Goldman Sachs raised risk sentiment and raised investor sentiment about the economy and corporate earnings. A US report that showed a slowing in industrial production contraction also lifted investor’s spirits and damped demand for safe haven assets. Ian Stannard of BNP Paribas SA stated, “The recent data releases and earnings reports out of the U.S. have buoyed equity markets and seen the yen and the dollar both come under some pressure. Today’s U.S. industrial production data will be key as to whether this improvement in risk appetite continues.”

Optimism Driven Trading Emerging

US corporate earnings reports have had a major effect on currency exchange rates. The stellar second quarter performance of both Intel and Goldman Sachs exceeded the estimates of analysts. Daisuke Uno of Sumitomo Mitsui Banking Corp. said, “There is a sense that optimism-driven trading is re- emerging. The forecast-beating results from Goldman Sachs and Intel suggest the yen will weaken and stocks will advance.” Other second quarter reports are due from many of the companies in the standard and Poor’s 500 Index.

Developed Countries to Lose 30 Million Jobs

Although risk sentiment was up many forex investors and experts feel that recent signs of an economic upturn will be short lived supported only be the trillions of dollars governments around the world have poured into the global economy. The Organization for Economic Cooperation and Development said that developed countries could lose 30 million jobs during the period beginning at the end of 2007 and ending in 2010. German data showed investor pessimism and analysts believe this data shows that the German economy will not start growing until 2010. Carsten Brzeski of ING stated, “The German economy could be among the first to escape the recession. However, it is ‘if’ and not ‘when,”

Currency experts expect forex trading for the rest of the week to be volatile.