The price for a barrel of Light, Sweet Crude soared over the past several trading days, climbing above $103.75 in this morning's early trading session. After approving limited action to quell Muammar Qaddafi's assault on the Libyan rebels in Benghazi, the UN airstrikes have had the effect of pushing oil prices higher through an anticipated disruption in supply.
USD - USD Bearish as Long-Term Investment Declines
The U.S. dollar fell against most of its major currency counterparts during last week's trading session. It saw a 300 pip fall against the euro and a 210 pip drop against the British pound. As a result, the EUR/USD has crossed the 1.4150 threshold and the GBP/USD is trading near the 1.6220 price level.
The dollar's weakness was brought on suddenly by disappointing economic releases from the U.S. The Long-Term Purchases report has shown that global demand for U.S. stocks, bonds and other financial assets fell in March. Net buying of long-term equities, notes and bonds totaled $51.5 billion during the month, compared with net buying of $62.5 billion in February.
In addition, the Building Permits report out of the U.S. increased less than projected in March. American housing has been steadily climbing lately, but a number of indicators have shown that the speed of recovery is slower than anticipated at almost every turn, with another wave of foreclosures nationwide dogging the housing and construction markets.
As for the week ahead, the most impacting economic releases from the U.S. look to be the Existing Home Sales and Durable Goods Orders. Traders are advised to follow these reports considering their correlation to local investment and the housing market mentioned in the above paragraphs. If we should see a continuation of last week's trends, the USD may persist in its bearishness.
EUR - Euro Upbeat as Many Anticipate Bailout Talks at EU Summit
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The euro saw a bullish trend against most of the major currencies during last week's trading session. The euro gained about 300 pips against the U.S. dollar, and the EUR/USD pair has crossed the 1.4150 line. The 17-nation common currency also saw a 460 pip gain vs. the Japanese yen, recovering much of its losses following last week's flight to safety by investors.
The euro strengthened last week partially due to a U.S. stock market rally. The rally has boosted risk appetite in the market modestly, and as a result increased demand for higher yielding assets, such as the euro and the British pound.
The euro was also affected by the bearish dollar. The dollar weakened last week after several economic reports have shown that the U.S. economy is recovering at a slower pace than estimated.
Looking ahead to this week, the euro actually appears relatively quiet in comparison to its currency rivals.