The U.S. Dollar Under Pressure

A tentative breakout is possible over the short/medium term for major currencies against the U.S. dollar, as the state of the economy in the United States remains week, albeit improving.
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The U.S. economy, improving but to out of the woods yetAs expected, the Fed left rates unchanged last week. In the final speech, FOMC confirmed that the ¡§pace of contraction is slowing¡¨, albeit the economic growth will remain subdued for some more time. The Fed will keep on buying securities at the appropriate time and for the required amount, while rates should remain accommodative for the coming months. In effect, the domestic product should decline in the second quarter as well, after having declined -5.5% in the final estimate of the first quarter. However, inventories are contracting and they could support growth in the final part of the year, or at the beginning of the next, along with an increase of consumes. In May, durable goods orders increased 1.8% month-on-month (-0.8% expected) and the personal consumer expenditure (PCE) rose 0.3% supported by the 1.4% move in personal income. Nevertheless, the increase in social security payments, which was one of the various measures introduced in the Obama fiscal stimulus package, was decisive in May¡¦s jump.