The dollar dropped on the 1st of July as a rise in global stocks in Europe and China downsized dollar demand. U.S. manufacturing shrank in June but at a slower pace during the prior month. Traders noted that a further drop in the dollar is likely. The British pound is also under pressure.
According to a new poll by CNN, Americans think Obama's health care reform package will cost too much. 51% polled said they favor the President's plan to 45% against. Two-thirds believe that they could still see the same doctors with Obama's plan.
The Eurozone economic sentiment number rose more than expected in June with the economic indicator at 73.3, revised from 70.2 in May. The Eurozone seems to be finding a hold as far as recovery is concerned, but the data doesn't tell anything about the strength of the recovery.
The dollar is still hated and stocks may be ahaed of themselves. Maybe the key to economic recovery in the U.S. is a good, solid recovery in the Eurozone.
Heated debate and a close margin was the rule, but the U.S. House passed the cap and trade energy bill. The vote was 219 - 212. About 40 Democrats voted against the bill. President Obama earlier in the week said that America must look for new energy alternatives and this bill was the way to go. Republicans said that the policy will result in higher energy prices for consumers and businesses.
In oil trading, August light sweet crude settled at $69.16, down $1.07 for the session. Oil finished the week down $1.27.
Personal income jumped up 1.4 percent due mainly to stimulus benefit payments from the government and lower taxes. Disposable personal income rose 0.2 percent in May.
The June University of Michigan consumer sentiment came in at 70.8, up from 68.7 in May. That's the highest since September! U.S. data saw personal income rise 1.4% in May. Americans are saving more. This is hurting China who export so much into the U.S. The consumption pattern change in the U.S. has forced China to get their Asian neighbors to take more of their goods. China is also limiting imports. China frankly needs world demand to rebound or their economy could be in real trouble.
The dollar ended the week mixed and traders see more two-way action ahead. Conditions are hard to read so let's assume that a seesaw market is coming up, especially with the 4th of July holiday in the U.S. upon us next week.
The pace of economic contraction is slowing and this seems to be in line with household spending showing signs of stabilizing. U.S. inflation data is still smooth with recessionary pressures helping there. Economic recovery may begin later this year.
The U.S. dollar has had a good week and could see further gains on Friday the 26th. U.S. data has, for the most part, been dollar friendly and given the current trend, the dollar could keep the gains going into early next week. Just how much risk appetite is out there among traders? That remains to be seen, but gold was a bit lower and commodities in general were lackluster this week.
