Daily U.S. Forex Summary

0

0

The US dollar extended gains against the yen

Thu, Jul 24 2008, 05:55 GMT
by Union Bank of California Team

Union Bank of California


The US dollar extended gains against the yen and euro as crude oil prices continue to slide. The greenback hit a 1 month high to the Japanese currency and a 2 week high to the euro following recent hawkishness from Treasury officials and Federal Reserve board members. Philadelphia Federal Reserve President Charles Plosser commented that rising inflation continues to be a problem and could force the Fed to raise interest rates even before labor and financial markets fully recover. Equity markets continue to gain as well, in a string of unexpectedly better corporate earnings from financial institutions.

The Euro dropped to both the dollar and the British pound, as new industrial orders in the Euro-Zone fell more sharply than expected in May. New orders fell 3.5% month over month and 4.4% year over year in May, prompting fears of a developing economic slowdown.

Sterling recovered versus the dollar as minutes released from the Bank of England’s most recent policy meeting, when rates were held at 5%, showed hawkishness from one policymaker. Gains remained limited as the market has already anticipated the hawkish stance considering recent data shows that UK consumer prices in June rose to their highest levels in 11 years.

The Japanese yen sunk to as low as 107.92 as risk appetite for the dollar continues to increase, supported by sliding oil prices and recovering equity markets.

Higher domestic inflation numbers did not change market outlook for the Bank of Canada to leave interest rates at 3.00%, as the Canadian dollar steadied to the greenback on Wednesday. Data showed that inflation rose past analyst expectations to 3.1% in June, up from 2.2% in May.

The Mexican peso rose to a five year high to the dollar on bets that the central bank could further raise interest rates. Peso showed as strong as 10.0231 in late trading Tuesday. A recent poll showed analyst expectations for further tightening monetary policy this year, as the central bank continues to fight three year high inflationary pressures due to global food costs.

The Australian dollar fell today as domestic inflation numbers were not high enough to rekindle momentum for continued rate hikes. The futures market shows a 50% chance of a rate cut by the Reserve Bank of Australia after data released Wednesday showed the consumer prices index up 1.5% in the 2nd quarter.

The New Zealand dollar fell a two week low against the American dollar as investors awaited the central bank’s monetary policy decision on Thursday.


Archive

Union Bank of California http://www.uboc.com | info@uboc.com

Legal disclaimer and risk disclosure

This market comment is prepared by Union Bank of California's Global FX & Derivatives Department for the general information of its customers. It is based of the most accurate information currently available, but should not considered investment advise or a guarantee of future exchange rate or trends.


Interested in forex trading? forex brokerage firms!


FOREX.com
Contact the broker/FDM
Open a demo account
GFT
Contact the broker/FDM
Open a demo account
Deutsche Bank
Contact the broker/FDM
Open a demo account
Ikon GM - Royal Division
Contact the broker/FDM
Open a demo account
Interactive Brokers LLC
Contact the broker/FDM
Open a demo account

FXstreet.com will give you a 3 months membership as soon as minimum rebates have been generated (€150 for private trader/ €300 for corporate trader)

[Read Premium full description]

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.

Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management.

Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

©2008 "FXstreet.com. The Forex Market" All Rights Reserved.