The market is going for strong numbers
August 1st was a very important day for the American dollar. It was the day, when one could see the combination of strong fundamental and technical factors. The dollar is acting against the euro again, it has already reached the trend line, as it can be seen on the diagram. The American currency has all chances to leave the trend line behind, if the current American news pertaining to the labor market and the industrial activity in July does not worsen the situation.
"Economic factors are inclining to the strong dollar," Joann Masters, a Mac currency analyst thinks. "The market is going for strong numbers," Steven Saywell, currency strategist at Citibank in London said. The analyst said that the euro was losing the race, because the global economy was reviving. The euro's strength, the analyst believes, is explained with the USA's export dependency and the business confidence situation in the Eurozone.
The ISM industrial index is expected to grow to 51.8 in July against 49.8 in June, which will be higher than the recession level and the 50-point growth. According to forecasts, the level of unemployment will grow to 6.3 percent, and the number of workplaces will increase by 18,000. The data of the forecast have been published by Reuters.
"The market is already looking for strong numbers after the good figures yesterday, so if anything the mood might be more profit-taking on the recent rally in the dollar," said Julian Jessop, chief European economist at Standard Chartered.
Naeem Wahid at HBOS Treasury Services believes, the strong growth of the ISM index will strengthen the American dollar. Mitul Kotecha, the head of forex strategy at Credit Agricole Indosuez in London, believes that the dollar continues its strong progress.