Buys of dollars by falling oil and poor prospects in Europe

Brussels - May 28, 2008 - The indicators of the eurozone point to a slowdown in the economy and the message cove among investors. Does lowering rates? It's question million, but nothing indicates that it will be because inflation continues to complicate life as the ECB has shown today the CPI of May preliminary Germany. A look at the euro / dollar exchange.

Finally, sanity has returned to the oil market, and traders seem to realize that their record over 135 dollars is unsustainable. In fact, the influential investor and multimillionaire George Soros is not tired of stress in the days prior, that oil was at similar levels days. A new drop in consumer confidence American forces them to assume that demand in the driving season is not going to be as robust as last summer. Since yesterday, the barrel is falling almost 10 dollars and is negotiated in the area of $ 126.

Because of these increases, the loss of German consumer confidence has spread to France, which has fallen to its lows of -41 points. As if this were not enough, tomorrow is the euro has been an ugly surprise. In the Eurozone, was expected to know the trade surplus for March by 1,500 million euros and the bomb exploded when it became known that in that period, the Old Continent entered into a deficit by more than 15,000 million euro.

Thus, the consequences of the strong euro beginning to feel a more forceful. It is likely that in the coming months, are not positive surprises in macroeconomic data of European countries. The only thing that has made the EU currency since the beginning of this week, has been downloaded from its roof at 1.5819 U.S. dollars monthly for a negotiated 1.5650. Therefore, operators are alerted to a possible correction to 1.5500 dollars.

From now on, eurobulls (investors who have bet on a euro upwards) will adjust their belts to hear all kinds of statements by members of the European Central Bank (ECB). Some will continue highlighting that inflation is well above its objectives and that rate hikes are possible, or repeated phrases like "verbal intervention", "high volatility", etc.. And the preliminary CPI of May Germany, which stood at 3%, more than six tenths in April, reinforces these views.

In an interview with French weekly L 'Express, the president of the ECB, Jean Claude Trichet, shows more concern for the common respect to price stability. It is now pressuring executives of European companies to lower their high wages. The same urges trade unions, which do not come into the temptation to ask for increases. Will losing this battle?

Horizon hopeful for the dollar

Since the coming months indicators will be the final verdict. With consumer confidence on the floor in all European nations, it is hoped that consumer prices do not continue to grow. Tomorrow will know the key employment data in Germany, which is estimated to have lost 25,000 jobs in May, against a decline of 7,000 from April.

Definitely, the Old Continent prepares for a beginning of summer cloudy with chance of showers. This situation contrasts with the U.S., which outlines a solid recovery in the second half of 2008. The data known today orders for durable goods in April, better than expected, pointing in that direction.

And we must remember that the market for bonds bets for higher rates from the Federal Reserve later this year. Are we at the beginning of the recovery of the dollar?

Source: El Economista