USD Stronger Across The Board; Euro zone PMI disappoints

No change in sentiment took place as London traders continue to buy the greenback. No mention of QE3 in Bernankes press conference sent equities and riskier assets lower and helped to underpin the greenback. Fundamental data from Europe disappoint. Onto US housing data.

Data from Europe mostly disappointed today when French, German and Euro zone manufacturing PMI came short of expectations. German manufacturing PMI decreased in June to 54.9 from previous 57.7. Euro zone Manufacturing PMI slowed to 52.0 from 54.6.

As manufacturing PMI slows down in most developed countries around the world, hinting the possibility of another recession, it comes as a weak consolation that German services PMI increased to 58.3 from 56.1. Euro zone services PMI also disappointed when it printed 54.2 from previous 56.0.

CBI reported sales in the UK dropped sharply from 18 to -2 which is the worst reading since June 2010. The sterling lost close to 300 points over the past two days and currently sits at the psychological level 1.60. Clear break and daily close below this level would open way to 1.54.

The common currency has been sliding against most trading partners was further hit after Finnish PM said that risk of serious financial crisis and recession was very high and Slovakian PM announced that during a phone call, Greek PM said he cannot guarantee reforms will find support in Greek parliament. The situation continues to be serious as evidenced by further increase in price of 5 year Greed CDS. This CDS trades at 2025 bps, up 138 bps just today.

New York session starts at 8:30 am ET with Unemployment Claims that are expected unchanged at 414K. At 10:00 am ET New Home Sales May are expected to decrease slightly after three months of gains. Analysts predict 311K from previous reading of 323K. As long as we do not see a serious deterioration, USD should continue to appreciate.