U.S. Dollar Mixed at the Midsession

The U.S. Dollar firmed a little following the release of two better than expected U.S. economic reports.

The U.S. Dollar firmed a little following the release of two better than expected U.S. economic reports. This morning it was reported that the S&P/Case-Shiller Housing Report showed unexpected growth while consumer confidence rose. Both of these reports helped the Dollar rebound after early session weakness. Overall, however, trading conditions at the midsession can best be described as sideways.

The EUR USD is positive at the midsession but a little off the high. Another report showing an improvement in the Euro Zone economy helped give this market an early boost, but some of the gains were washed away by the bullish U.S. economic reports. Technically, this market remains in a range of 1.4447 to 1.4045.

Weakness continues to plague the GBP USD. This currency pair has been in a downtrend most of the month following the announcement by the Bank of England to expand its asset-buyback program. The sizeable government debt is also an issue pressuring this market. Concerns are mounting about the government’s ability to pay-off its debt.

Weakness in the Asian equity markets could be the catalyst driving the Japanese Yen higher. There is talk that Asian investors may be unwinding carry trade positions.

The USD CAD is trading better at the midsession. Lower oil prices could be causing traders to lighten up long positions in the Canadian Dollar after a four-day rally. This pair is rapidly approaching a key area on the charts as traders will soon have to decide to buy in front of the low for the year at 1.0631 or let the Canadian Dollar continue to strengthen. The bottom was reached in early August when the Canadian government surprised traders by announcing a worse than expected unemployment report. This market may hold the low until at least the next unemployment report.

Although the U.S. equity markets are trading higher, the AUD USD is trading lower. This could be a sign that appetite for risk is beginning to wane. The divergence between the higher yielding Australian and New Zealand Dollars could also be a sign that equity markets are close to a top.