PPI and Trade Balance Make EUR/USD Drop Farther

EUR/USD dropped to its new mid-term minimum (since 07/02/2007) at 1.3560, continuing its fall after the major currency intervention by European Central Bank, which took place yesterday to prevent a possible low liquidity on the financial markets of the European Union. Some good macroeconomic news released in U.S. added some fuel to dollar rally.
Producer Price Index came out at 0.6% increase compared to 0.1% consensus value and -0.2% previous value. Core component of PPI was worse but not dramatically - 0.1% of growth compared to 0.2% in forecast.
U.S. Trade Balance report showed some psychologically positive numbers. Unfortunately for the U.S. they are still mathematically negative, but nevertheless trade balance deficit continue to decrease. In June it was -$58.1 billions ($2.9B better than expected and $1.1B better than previous month).

EUR/USD Uptrend Lowers Pace

EUR/USD, showing three days of straight growth with new monthly maximums every day, slightly lowered its rally today. Almost touching 1.3800 this currency pair stopped at 1.3797 and then rolled back for around 20 pips. Meanwhile, initial jobless claims for the previous week came out better than expected - 308,000 against 320,000 claims. U.S. trade balance came out at the expected level - $60.0 billions. If tomorrow Friday will be bullish and the 1.3800 level be broken a larger scale uptrend for EUR/USD will begin.

EUR/USD at Two Months Low

U.S. dollar rallied to its two months low at 1.3320 today. Surprisingly the United States Trade Balance Deficit for April 2007 was reported almost 5 billion dollars lower than predicted $58.5 billion, whereas March Trade Balance Deficit was revised to $62.4 billion (almost a billion lower than previous value). Trade Balance Deficit tightening was caused by both lower import and higher export which is a very good sign for the U.S. economics. But this wasn't the main reason for today's EUR/USD correction, the main reason was the higher yield for U.S. bonds which broke through 5.00% yesterday and now many long term investors need to buy dollars to get into the bonds.