USD limits Higher, Oil Retreat

The US Dollar touches new 11-months high versus the euro presently above the 1.40 levels and apprehended steady close to 2 ½-year high against the pound at 1.7540. The greenback continues to stay superior amid growing fears of speedily deteriorating financial fundamentals, which as a result sent crude oil to an intra-day low down at $101.43 a barrel. Also propping the dollar elevated was the announcement from Lehman Brothers to sell off part of its business to shore up its accounts, thereby tempering marketplace jitters in the interim.

Traders would look forward to US financial reports slated for let loose Thursday morning, consisting of the July buy and sell deficit, weekly-unemployed claims and the August Federal Budget. Consensus estimate expect the buy and sell deficit to border higher to $58 billion in July, against a $56.77 billion shortfall from the prior month. Weekly unemployed claims seen slight changed at 440 thousand against 444 thousand from the previous week. In the meantime, the Federal Budget forecasted to get smaller to $106.2 billion for August, compared with $117.0 billion per month earlier.

Euro Dips to New Lows

On Wednesday, the euro sheer into its trading session, slumping to a fresh 13-month low against the yen at 150.18 and a fresh 11-month low against the dollar at 1.4014. Comments from Euro region officials toughened lingering doubts of further worsening in economic basics, with Prime Minister Juncker of Luxembourg forewarning that he “can spot risks of technological recession” given the Q2 increase figures, shimmering two successive quarters of unenthusiastic GDP. He further said that inflation might reach its peak in July whereas the hold up would be drawn than at first anticipated.

President Trichet of European Central Bank expects to encompass “a steady healing over the coming years after the current depressed incident”. He said that the “drop of oil price from their high in July will assist to strengthen throwaway income”, suggestive of the Euro region financial system may be approaching a bottom. Trichet also anticipated that the existing interest rate carriage would contribute to a come back to price constancy during 2010.

EURO and US Dollar holds stable around 1.4040, with hold up starting at 1.40, back by 1.3970 and 1.3940. Further floors will come out at 1.39, back by 1.3850 and 1.38. In the meantime, gains will aim short-term resistance at 1.4060, followed by 1.41 and 1.4130. Successive ceilings are at 1.4165, back by 1.42 and 1.4250.