Euro is at important support levels

by Angelo Airaghi [Guest Analyst]

5/21/2007

After reaching 2004 highs, the European currency has been consolidating within a tight range from 1.3460 to 1.3690. The medium/long term trends are still pointing upward. However, failure for the Euro to overcome key technical points could increase selling pressure.

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U.S. consumer spending should moderate, but only marginally

Following last week Producer Price Index (PPI), which was basically in line with expectations, the seasonally adjusted all-items Consumer Price Index (CPI) rose 0.4% in April, below market forecast. Core CPI, excluding food and energy, advanced 0.2%. Year-over-year, the CPI increased 2.6% in April (March rate was 2.8%) and the core CPI moved 2.3% (March rate was 2.5%). The greatest pressure is coming from the energy components, but food prices are rising as well. The headline Producer Price Index (PPI), on the other hand, increased 0.7% in April, only a fraction above market expectations for a 0.6%. Here again the energy sector was the main traction for prices (+3.4%). Core prices were unchanged month over month for the second consecutive month, while expectations anticipated a 0.2% rise. Yearly, the figure remained at 3.2% with core prices shrinking to 1.5% from 1.7% in March. While both PPI and CPI indexes showed some improvements compared to previous months, which could have positive effects on growth, the overall inflation’s trend is pointing upward.


Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.