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Jobs Data Disappoints, USD Edges Up

Sun, Nov 8 2009, 21:58 GMT
by Korman Tam

Forexnews.com

11/6/2009 2:30 PM: EUR/$..1.4840 $/JPY..89.82 GBP/$..1.6604 $/CHF..1.0176 AUD/$..0.9154 $/CAD..1.0764

Jobs Data Disappoints, USD Edges Up

 
***Please note there will be no US FX Trading Summary between 11/9-11/27.***

The major currency pairs teetered within a close range in the Friday session, whipsawing sharply following the release of the October US unemployment report. The euro slid from above the 1.49-level to a session low at 1.4814 while the yen jumped to 89.62 against the greenback.

The October labor report was worst than expected, with the unemployment rate climbing to a fresh 26-year high at 10.2% versus 9.8% from September. The non-farm payrolls figure revealed a loss of 190k jobs in October, worst than the forecasted loss of 175k jobs from a downwardly revised September reading of 219k jobs lost. The worst than estimated jobs data sent US equity futures lower and pushed the greenback higher on a shift from riskier assets.

Also released earlier today were wholesale inventories, wholesale sales, and consumer credit. The wholesale inventories report edged out consensus estimates for a decline of 1.0%, instead declining by 0.9% in September from a 1.3% decline a month earlier. The wholesale sales reading rose by 0.7% versus an upwardly revised 1.1%.

With the labor market yet to show signs of bottoming, the Fed will likely continue to leave monetary policy unchanged into the second half of 2010. Given the commentary from the RBA and ECB, the FOMC will lag behind the other central banks as they begin to rein in the aggressive quantitative easing implemented over the past 2-years. As such, the dollar will continue to be the risk-averse trade benefitting from any renewed fears of a stall in the global economic recovery.

EURUSD holds steady near 1.4840, with support seen at 1.48, followed by 1.4760 and 1.4730. Additional floors will emerge at 1.47, backed by 1.4660 and 1.4620. Resistance starts at 1.4870, followed by 1.49 and 1.4940. Subsequent ceilings are eyed at 1.4980, backed by 1.50 and 1.5040.

Published on  Sun, Nov 8 2009, 21:58 GMT

USD Edges Up Ahead of Jobs

Thu, Nov 5 2009, 22:39 GMT
by Korman Tam

Forexnews.com

11/5/2009 2:45 PM: EUR/$..1.4863 $/JPY..90.64 GBP/$..1.6575 $/CHF..1.0167 AUD/$..0.9096 $/CAD..1.0646

USD Edges Up Ahead of Jobs

The dollar was higher by the afternoon Thursday session as traders took to the sidelines ahead of tomorrow’s key US labor report. The greenback rebounded from a near one-week low against the euro around 1.4917 to bounce toward the 1.48-figure.

The economic reports released this morning included weekly jobless claims, Q3 productivity and Q3 labor costs. The weekly jobless claims improved to 512k versus an upwardly revised 532k in the previous week. Meanwhile, Q3 productivity blew away consensus estimates for a decline to 6.4%, instead surging to 9.5% from 6.9% in the previous quarter – its highest level in the third quarter since 2003. The preliminary reading for labor costs in Q3 declined by more than expected, falling by 5.2% compared with a 6.1% drop in the previous quarter.

Traders will look ahead to Friday’s key economic reports, consisting of the October unemployment rate, non-farm payrolls, September wholesale inventory and sales, and consumer credit. Consensus estimates are looking for the unemployment rate to climb to new multi-decade high at 9.9% from 9.8% in September. Meanwhile, non-farm payrolls are seen improving to 175.0 jobs lost in October compared with 263k jobs shed in the previous month.
 
Euro Relinquishes Gains

The ECB left monetary policy unchanged at 1.0% when it announced its decision earlier in the session. In the accompanying press conference by ECB President Trichet, he hinted at the prospects for reining in the Bank’s quantitative easing, saying “the Governing Council will make sure that the extraordinary liquidity measures taken are phased out in a timely and gradual fashion and that the liquidity provided is absorbed in order to counter effectively any threat to price stability over the medium to longer term”.

The euro initially popped higher following the more hawkish commentary from Trichet, rising past the 1.49-handle to 1.4917 before retreating back toward the 1.4850-level. Support starts at 1.4820, followed by 1.48 and 1.4765. Subsequent floors are eyed at 1.4730, backed by 1.47 and 1.4650. Meanwhile, gains will target resistance at 1.49, followed by 1.4930 and 1.4970. Additional ceilings will emerge at 1.50, followed by 1.5040 and 1.5080.

Published on  Thu, Nov 5 2009, 22:39 GMT

Dollar Edges Higher

Tue, Nov 3 2009, 22:26 GMT
by Korman Tam

Forexnews.com

11/3/2009 1:57 PM: EUR/$..1.4703 $/JPY..90.33 GBP/$..1.6415 $/CHF..1.0268 AUD/$..0.9009 $/CAD..1.0677

Dollar Edges Higher

The dollar was mixed against the majors, climbing higher against the euro to 1.4628 but sliding versus the British pound past the 1.64-level to 1.6419. Spot gold rose to a new record high above the $1,080-mark to $1,083.50 per ounce while crude oil continued to trade beneath $80-per barrel.

The US economic reports released earlier today saw September durable goods and factory orders. The headline durable goods orders increased by 1.4% in September versus 1.0% previously, while the ex-transportations figure rose by 1.2% from 0.9% in August. Meanwhile, factory orders reversed the 0.8% decline in August, increasing by 0.9%.

The key highlight on Wednesday will be the ADP private sector payrolls, which are seen improving to reflect a loss of 188.0k jobs in October from 254.0k jobs a month earlier. Also due out tomorrow will be the October non-manufacturing ISM report, estimated to improve to 51.8 from 50.9 in September.
 
RBA Tightens Policy

The Reserve Bank of Australia lifted its benchmark lending rate by 25-basis points to 3.5% when it announced its policy decision in the early Tuesday session. In the accompanying statement, RBA Governor Stevens sounded an optimistic tone, saying “economic conditions in Australia have been stronger than expected and measures of confidence have recovered” and “the rate of unemployment is now likely to peak at a considerably lower level than earlier expected”. The statement touched on the recent strength of the Australian dollar, noting “that the rise in the exchange rate is likely to constrain output in the tradeables sector and dampen price pressures”. Stevens said that “growth is likely to be close to trend over the year ahead and inflation close to target”. Lastly, the statement added “with the risk of serious economic contraction in Australia now having passed, the Board’s view is that it is prudent to lessen gradually the degree of monetary stimulus that was put in when the outlook appeared to be much weaker”.

AUDUSD trades around the 0.90-level with interim resistance starting at 0.9040, followed by 0.9070 and 0.91. Subsequent ceilings will emerge at 0.9130, backed by 0.9165 and 0.92. On the downside, support begins at 0.8960, followed by 0.8930 and 0.89. Additional floors are seen at 0.8865, backed by 0.8840 and 0.88.

Published on  Tue, Nov 3 2009, 22:26 GMT

USD Recovers from Losses

Mon, Nov 2 2009, 22:37 GMT
by Korman Tam

Forexnews.com

11/2/2009 3:22 PM: EUR/$..1.4748 $/JPY..90.34 GBP/$..1.6376 $/CHF..1.0231 AUD/$..0.9008 $/CAD..1.0797

USD Recovers from Losses

The dollar recovered from its losses earlier in the morning following a stronger than expected US manufacturing and housing reports that prompted traders to send the riskier currencies higher. US equities were unable to sustain earlier gains, teetering between positive and negative territory throughout the session.

The October manufacturing ISM report sharply beat estimates, improving to 55.7 and outpacing calls for an improvement to 53.0 from 52.6 in September. The employment index jumped to 53.1 from 46.2 a month earlier, while the new orders component declined to 58.5 from 60.8. The report also said that new orders, production and employment are growing while inventories were contracting and supplier deliveries were slower.

In the coming week, traders will look ahead to Friday’s labor report, with the unemployment rate expected to continue creeping higher to 9.9% in October from 9.8% in September. Meanwhile, the non-farm payrolls are estimated to reveal a loss of 175k jobs compared with a loss of 263k jobs previously.

Aussie Advances Ahead of RBA

The Australian dollar rallied overnight against its US counterpart, recovering somewhat from last week’s slide and climbing back over the 0.91-figure earlier. With the Reserve Bank of Australia slated to announce the decision from its monetary policy early in the Tuesday session, traders have been pricing in a 25-basis point rate hike from the RBA to 3.50% thereby pushing the Aussie higher.

In the Government’s mid-year outlook, Australia’s economic outlook was upgraded, lowering its estimates for unemployment to peak at 6.75% versus the previous 8.5% forecast. Also, the report highlighted an improvement in the Government’s forecast for economic growth for the year ending June 2010 at 1.5%, versus a 0.5% contraction estimated 6-moths ago.

AUDUSD has since retreated back toward the 0.90-figure with support seen at 0.8960, followed by 0.8940 and 0.89. Subsequent floors are eyed at 0.8870, backed by 0.8830 and 0.88. On the upside, resistance starts at 0.9050, followed by 0.91 and 0.9120. Additional ceilings will emerge at 0.9150, followed by 0.9180 and 0.92.

Published on  Mon, Nov 2 2009, 22:37 GMT

US GDP Surges, EUR Advances

Thu, Oct 29 2009, 21:57 GMT
by Korman Tam

Forexnews.com

10/29/2009 2:00 PM: EUR/$..1.4832 $/JPY..91.51 GBP/$..1.6547 $/CHF..1.0183 AUD/$..0.9169 $/CAD..1.0671

US GDP Surges, EUR Advances

The dollar relinquished its previous session’s strength against the majors, falling toward the 1.4850-level against the euro and the 1.6602-handle versus the British pound. The US equity bourses rebounded with the Dow Jones advancing by 1.65%, the S&P 500 advancing by 1.84% and the Nasdaq up by nearly 1.7% by the afternoon session. Crude oil also climbed back above the $80-per barrel mark.

Optimism over the outlook for the US economy was reinforced by reports released earlier in the morning – prompting traders to jump back into riskier assets and sending the euro higher. The advanced reading of Q3 GDP sharply reversed the previous quarter’s decline of 0.7% and beat consensus estimates for an increase of 3.3%, instead surging by 3.5%. The advanced Q3 sales component of GDP advanced by 2.5%, compared with 0.7% from Q2 while the headline PCE index increased by 2.8% from 1.4% previously. Weekly jobless claims fell by less than expected, marginally lower to 530k from 531k a week earlier.

The calendar for Friday consists of September personal income, personal consumption, PCE, core PCE, NAPM, Chicago PMI and the University of Michigan consumer sentiment survey. Following the disappointing Conference Board’s consumer confidence earlier this week, traders will focus on the University of Michigan consumer sentiment survey, expected to decline to 70.0 in October from 73.5 a month earlier. The expectations component is forecasted to decline to 69.0 from 73.5, while the current conditions index is seen slipping to 72.1 from 73.4.
 
Euro Regains Footing

The euro recouped its previous session losses on the heels of the stronger than expected advanced reading of Q3 GDP. The single currency popped up above the 1.48-figure to stabilize around the 1.4850 mark against the greenback in Thursday trading. The Eurozone economic reports released overnight included Germany’s October unemployment data, and Eurozone sentiment surveys.

Germany’s October unemployment rate unexpectedly improved to 8.1% beating estimates for an increase to 8.3% from 8.2% in September. The Eurozone economic sentiment improved in October to 86.2 from 82.8 while the consumer sentiment improved slightly to -18.0, from -19.0 a month earlier.

EURUSD will encounter interim resistance starts at 1.4850, followed by 1.4880 and 1.49. Subsequent ceilings are eyed at 1.4930, backed by 1.4960 and 1.50. On the downside, support starts at 1.48, followed by 1.4770 and 1.4730. Additional floors are eyed at 1.47, backed by 1.4665 and 1.4620.

Published on  Thu, Oct 29 2009, 21:57 GMT

Weak Confidence Props USD

Tue, Oct 27 2009, 21:53 GMT
by Korman Tam

Forexnews.com

10/27/2009 2:00 PM: EUR/$..1.4782 $/JPY..91.79 GBP/$..1.6340 $/CHF..1.0231 AUD/$..0.9122 $/CAD..1.0666

Weak Confidence Props USD

The dollar surged against the majors in early Tuesday trading, rallying to 1.4789 against the euro and 1.6287 versus the British pound. The catalyst for the greenback’s advance was earlier weaker-than-expected US economic data, prompting heightened risk aversion and a shift from riskier assets. Spot gold and crude oil both traded lower, easing to $1,036 per ounce and dipping below the $80 per barrel level to $79. The major US equity bourses were largely flat on the session, with the Dow Jones hovering just above the 9,900-mark.

There were several key economic releases earlier in the session, including August Case-Shiller home prices, the October Conference Board’s consumer confidence survey and the October Richmond Fed manufacturing index. The Conference Board’s consumer confidence survey for October sharply missed consensus estimates for an improvement to 54.3, instead tumbling to 47.7 from 53.1 in September. The disappointing confidence indicator sent the dollar sharply higher as traders dumped riskier assets for the safe-haven play.

The calendar for Wednesday consists of September durable goods orders and new home sales.
 
Euro Slumps

The euro continued its slide against the dollar after failing to hold onto recent gains above the psychologically key 1.50-level. Losses accelerated yesterday and extended with the disappointing US consumer confidence survey, sending the pair to 2-week low below the 1.48-figure to 1.4775.

EURUSD will encounter support at 1.4740, followed by 1.47 and 1.4650. Subsequent floors are eyed at 1.4620, backed by 1.46 and 1.4570. On the upside, resistance will emerge at 1.48, followed by 1.4830 and 1.4865. Additional gains will target ceilings at 1.49, backed by 1.4930 and 1.4965.

Published on  Tue, Oct 27 2009, 21:53 GMT

EUR & GBP Buoyed

Thu, Oct 22 2009, 22:00 GMT
by Korman Tam

Forexnews.com

10/22/2009 2:30 PM: EUR/$..1.5023 $/JPY..91.28 GBP/$..1.6620 $/CHF..1.0049 AUD/$..0.9264 $/CAD..1.0478

EUR & GBP Buoyed

The dollar relinquished its earlier gains against the majors, slipping back beneath the1.50-level versus the euro and remaining mired past the 1.66-handle against the British pound. The Dow Jones and S&P 500 were higher on the session, while crude oil held steady above the $80 per barrel mark. The initial catalyst for the greenback’s reprieve was speculation overnight that China would soon mitigate its economic stimulus packages, tempering the shift to riskier assets.

There was a barrage of G7 economic reports released on Thursday. The US data included weekly jobless claims, the September leading economic indicators index and August monthly home prices. Weekly jobless claims unexpectedly crept higher to 531k from an upwardly revised 520k in the previous week. The August monthly home price index revealed further declines, down 0.3% versus a 0.3% increase in July and lower by 3.6% compared with a year earlier at -4.2%. Lastly, the September leading economic indicators index beat consensus estimates, climbing to 1.0% from a downwardly revised 0.4% from August.
 
Euro Firms above 1.50

The euro dipped briefly in London trading to 1.4945 before recovering back above the 1.50-level. Sentiment continues to be bullish for the euro if it can continue to trade above the 1.50-handle. The next key level for the EURUSD pair stands around the 1.53-mark, the neckline region for last year’s triple top formation from March to August 2008.

In the coming session, traders will look ahead to several key reports, including Germany’s October manufacturing PMI, Germany October Ifo sentiment survey, Eurozone October manufacturing PMI and August industrial orders. The data released overnight saw the Eurozone trade balance post a deficit of 1.3 billion euros in August, versus a surplus of 6.6 billion euros from July.

EURUSD will encounter interim resistance at 1.5040, followed by 1.5070 and 1.51. Subsequent ceilings are eyed at 1.5130, backed by 1.5165 and 1.52. On the downside, support starts at 1.50, followed by 1.4970 and 1.4945. Additional losses will be tempered at 1.49, followed by 1.4860 and 1.4820.

GBP Regains Footing

The sterling fell beneath the 1.65-level overnight to 1.6489, but has since regained its footing back above the 1.66-handle. Data revealed disappointing UK retail sales figures for September, printing flat on a monthly basis and missing estimates for an increase of 0.5%, while falling short of consensus forecasts for an improvement to 2.8%, instead edging up by 2.4% from 2.1% a year earlier. Traders will look ahead to Q3 UK preliminary GDP, seen posting a 4.6% contraction, improving somewhat from a 5.5% contraction a year prior.

Published on  Thu, Oct 22 2009, 22:00 GMT

Dollar Tumbles to Fresh 14−mth Lows

Wed, Oct 21 2009, 21:55 GMT
by Korman Tam

Forexnews.com

10/21/2009 2:10 PM: EUR/$..1.5042 $/JPY..91.03 GBP/$..1.6622 $/CHF..1.0040 AUD/$..0.9312 $/CAD..1.0395

Dollar Tumbles to Fresh 14-mth Lows

The dollar sold off sharply across the board in the Wednesday session despite a dearth of US economic data earlier in the morning. The greenback plunged to a fresh 14-month low against the euro past the psychologically key 1.50-level to 1.5040, a new 15-month low versus the Swiss franc at 1.0038 and 14-month low against the Australian dollar at 0.9326. A shift into riskier assets continues to be detrimental for the US dollars as traders price in improving conditions in the global economy. Crude oil prices climbed higher today, rallying above the $81 per barrel level by afternoon trading.

The Fed’s Beige Book provided an optimistic assessment of the US economy, saying conditions have stabilized or improved modestly in many sectors since its last report. The Fed said that reports of gains in economic activity outnumber the declines, though the improvements are small and scattered. However, it tempered its assessment by saying adding that labor markets are typically characterized as weak or mixed, albeit with pockets of improvement.

The economic calendar for Thursday will see weekly jobless claims, August home prices and the September leading economic indicators index. Weekly jobless claims are estimated to edge up slightly to 515k from 514k in the previous week. Meanwhile, the leading economic indicators index is forecasted to improve to 0.80% from 0.60% in August.
 
Euro Propped Higher

The euro surged to its highest level since August 2008 above the 1.50-level to 1.5040. The single currency continues to benefit from markets’ shift toward riskier assets, with the euro likely to remain buoyed over the remainder of the year. Interim resistance is eyed at 1.5070, followed by 1.51 and 1.5140. Additional resistance is seen at 1.5165, backed by 1.52 and 1.5250. On the downside, support begins at 1.50, followed by 1.4960 and 1.4930. Subsequent floors are seen at 1.49, backed by 1.4850 and 1.48.

Published on  Wed, Oct 21 2009, 21:55 GMT

CAD Slumps on BoC

Tue, Oct 20 2009, 22:05 GMT
by Korman Tam

Forexnews.com

10/20/2009 2:40 PM: EUR/$..1.4928 $/JPY..90.71 GBP/$..1.6366 $/CHF..1.0124 AUD/$..0.9221 $/CAD..1.0488

CAD Slumps on BoC

The dollar was mixed in the Tuesday session, climbing sharply higher against the Canadian dollar past the 1.05-figure while sliding versus the euro just shy of the 1.50-level. The US economic reports released earlier today were largely disappointing. The September housing starts figure missed consensus estimates for an increase to 610k units from 598k units, instead dropping to 590k units. The September building permits reading also disappointed, falling to 573k units versus 580k units a month earlier. Meanwhile, the headline PPI figures for September were weaker than anticipated, declining by 0.6% m/m and 4.8% y/y. The core PPI readings also missed forecasts, declining by 0.1% m/m and edging up by 1.8% on an annualized basis.
 
BoC Unchanged, Drags Canadian Dollar Lower

The Bank of Canada left interest rates unchanged at 0.25% when it announced its monetary policy decision earlier in the session. Although the BoC sounded an optimistic tone in its subsequent policy statement, acknowledging that “a recovery in economic activity is under way in Canada”, it cautioned that “heightened volatility and persistent strength in the Canadian dollar are working to slow growth and subdue inflation pressures”. Further, the Bank said “the current strength in the dollar is expected, over time, to more than offset the favorable developments since July”.

USDCAD surged following the comments from the BoC, spiking past the 1.05-level from its session low of 1.0269. The pair will encounter support at 1.0460, backed by 1.4030 and 1.04. Subsequent floors are seen at 1.0370, followed by 1.0340 and 1.03. On the upside, resistance is eyed at 1.05, followed by 1.0525 and 1.0560 and 1.06. Additional ceilings are eyed at 1.0640, followed by 1.0675 and 1.07.

Published on  Tue, Oct 20 2009, 22:05 GMT

USD Slumps on Blockbuster JPM Earnings

Wed, Oct 14 2009, 22:14 GMT
by Korman Tam

Forexnews.com

10/14/2009 2:29 PM: EUR/$..1.4917 $/JPY..89.35 GBP/$..1.5990 $/CHF..1.0149 AUD/$..0.9138 $/CAD..1.0271

USD Slumps on Blockbuster JPM Earnings

The beleaguered dollar found no reprieve in the Wednesday session, extending its losses to fresh 14-month lows against the euro and Australian dollar to 1.4934 and 0.9156, respectively. A shift to riskier assets was triggered by a stronger than expected earnings report from JP Morgan Chase, prompting advances in the US equity bourses with the Dow Jones, Nasdaq and S&P 500 all gaining by more than 1.2% by afternoon trading. The Dow Jones edged higher toward the psychologically key 10,000-level, briefly breaching above it on an intra-day basis for the first time in a year.

The economic data released earlier in the session were largely mixed, consisting of retail sales, import prices, export prices and business inventories. The headline retail sales figure was better than estimated, albeit still declining by 1.5% for September versus a 2.7% from August. The excluding automobiles retail sales figure beat consensus estimates also, posting an increase of 0.5%, better than calls for a 0.2% increase from 1.1% a month earlier. The August business inventories figure revealed a 1.5% drop from a 1.0% decline in July.

The minutes of the FOMC’s September meeting revealed that some policymakers felt increasing the scale of Fed’s asset purchases would improve the recovery, stressing the importance of ability to increase asset purchases if the economic outlook worsened. The Fed minutes said that policymakers judged costs of growth being weaker than anticipated could be relatively high while expecting inflation to remain subdued for some time amid substantial resource slack. The Fed also raised its economic projections for the second half of 2009 and subsequent years.

The calendar for Thursday will see a barrage of key reports, including weekly jobless claims, September CPI, October NY Fed manufacturing survey and the October Philadelphia Fed business index. The headline CPI figures for September are seen increasing by 0.2% on a monthly basis and lower by 1.4% on an annualized basis. The core CPI readings are expected to increase by 0.1% m/m and 1.4% y/y. Meanwhile, the October Philadelphia Fed manufacturing survey is expected to slip to 12.0 from a 14.1 reading in September.

EURUSD continues to trade near its highest levels since August 2008 above the 1.49-handle. Resistance is seen at 1.4950, followed by 1.4980 and 1.50. Subsequent ceilings are eyed at 1.5040, backed by 1.5070 and 1.51. On the downside, support starts at 1.49, followed by 1.4860 and 1.4820. Additional floors are eyed at 1.48, backed by 1.4750 and 1.47.

Published on  Wed, Oct 14 2009, 22:14 GMT

Greenback Slides to 14−mth Low

Tue, Oct 13 2009, 22:11 GMT
by Korman Tam

Forexnews.com

10/13/2009 1:40 PM: EUR/$..1.4846 $/JPY..89.61 GBP/$..1.5918 $/CHF..1.0217 AUD/$..0.9060 $/CAD..1.0319

Greenback Slides to 14-mth Low

The dollar resumed its sell-off in the Tuesday session, falling to its lowest level since August 2008 against the euro at 1.4874 and the Australian dollar at 0.9124. Spot gold continued to extend its gains, touching a fresh all-time high just shy of the $1,070 level at $1,069.70, while crude oil edged up higher to $73.87 per barrel. US equities were largely flat, little changed from the previous session.

With corporate earnings season picking up this week, traders will closely scrutinize tomorrow’s economic reports. The data to be released include September retail sales, import prices, export prices and business inventories. The headline retail sales report is expected to post a 1.4% decline in September compared with a 2.7% increase a month earlier. The excluding automobiles retail sales are expected to improve by 0.2% for September versus a 1.1% in the previous month.
 
Euro Extends Gains

The euro shrugged off the disappointing Germany ZEW sentiment survey released overnight, climbing to its highest level against the dollar since August 2008 at 1.4874. Germany’s October ZEW current conditions survey deteriorated further to -72.2, missing expectations for an improvement to -69.0 from -74.0 in September. The ZEW economic sentiment also fell short of consensus estimates for an improvement to 58.3, instead slipping to 56.0 from 57.7 previously.

In the session ahead, the calendar is light with the release of the Eurozone August industrial production. On a monthly basis, industrial production is estimated to reverse the 0.3% decline from July, improving by 1.0% while improving marginally with a 15.5% decline versus a 15.9% decline in the previous month.

EURUSD continues to hover near its 14-month highs near 1.485 with interim resistance starting at 1.4875, followed by 1.49 and 1.4940. Subsequent resistance is eyed at 1.4970, backed by 1.50 and 1.5030. On the downside, support begins at 1.48, followed by 1.4760 and 1.4720. Additional losses will target support at 1.47, backed by 1.4660 and 1.4630.

Published on  Tue, Oct 13 2009, 22:11 GMT

Greenback Slumps on Shift to Riskier Assets

Thu, Oct 8 2009, 22:28 GMT
by Korman Tam

Forexnews.com

10/8/2009 3:25 PM: EUR/$..1.4790 $/JPY..88.37 GBP/$..1.6082 $/CHF..1.0258 AUD/$..0.9062 $/CAD..1.0508

Greenback Slumps on Shift to Riskier Assets

The dollar’s respite proved short-lived as traders resumed selling the currency in the Thursday session, pushing it to a fresh one-year low against the Australian dollar at 0.9088 and two-week low against the euro at 1.4816. The equity, commodity and energy markets were in lockstep as spot gold touch record high for its third consecutive session past the $1,055 per ounce level and crude oil edging back above the $70 per barrel level near $72. The major US equity bourses also climbed higher, with the S&P 500 and Nasdaq advancing by nearly 1% in the afternoon session.

The economic data released earlier in the session saw weekly jobless claims improve to 521k from 551k a week prior and the August wholesale inventories slip by 1.3% from a 1.4% decline in the previous month. Speaking earlier today was Richmond Fed President Lacker reiterated that the economic outlook remains unchanged from the previous FOMC meeting, adding that the risk of sliding into a recession again in 2010 has diminished substantially. He also quelled speculation of impending rate hikes advising that the Fed should not tighten policy today.
 
Euro Edges Past 1.48

The euro touched a two-week high at 1.4816 on the heels of the ECB monetary policy decision in morning trading. As expected the ECB left interest rates unchanged at 1.0%, but the focus largely hovered over the subsequent press conference from Bank President Trichet for a sense of whether the ECB follow the RBA in tightening monetary policy. Trichet said that current interest rates are appropriate and a return of inflation to moderate positive rates expected within coming months. He added that he expects to see a period of stabilization and gradual economic recovery. Moreover, Trichet suggested that the recent survey indicators support for the view the Eurozone economy is stabilizing. Although Trichet didn’t provide clear signals that interest rate increases were imminent, it can be interpreted that rates have bottomed and the next move by the Bank will rate hikes instead.

EURUSD holds steady near 1.48, with support seen at 1.4760, followed by 1.4730 and 1.47. Subsequent floors are eyed at 1.4650, backed by 1.46 and 1.4570. On the upside, gains will target 1.4830, followed by 1.4860 and 1.49. Additional resistance will emerge at 1.4940, backed by 1.4980 and 1.50.

Published on  Thu, Oct 8 2009, 22:28 GMT

Greenback Recovers, Eyes ECB, BoE

Wed, Oct 7 2009, 22:12 GMT
by Korman Tam

Forexnews.com

10/7/2009 3:25 PM: EUR/$..1.4677 $/JPY..88.57 GBP/$..1.5939 $/CHF..1.0338 AUD/$..0.8885 $/CAD..1.0627

Greenback Recovers, Eyes ECB, BoE

The greenback stabilized following yesterday’s steep declines against the major currencies, pushing the euro beneath the 1.47-level to 1.4660 while holding the Aussie below the 0.89-figure. There was a dearth of US economic reports in the Wednesday session prompting foreign exchange traders to take their cues from the equity and commodities markets. Spot gold extended gains to a new record high at $1,048.20 per ounce while oil drifted beneath the $70 per barrel level to settle at $69.57 per barrel. Meanwhile, US equity bourses were slightly lower with the Dow Jones posting a 0.40% decline and both the Nasdaq and S&P 500 were marginally lower.

The economic calendar for Thursday will see weekly jobless claims, which are expected to ease to 540k, wholesale sales, seen edging up to 0.70%, and wholesale inventories, anticipated to post a 1.0% decline.
 
Euro Consolidates

The euro relinquished some of its previous session’s gains versus the dollar, drifting as traders look ahead to European Central Bank’s policy announcement, slated for 7:45 AM. Although the Bank is expected to interest rates unchanged at 1.0%, markets will closely scrutinize the subsequent press conference by ECB President Trichet. Particularly following the RBA’s surprise rate hike earlier in the week, traders will gauge the likelihood for an ECB rate hike over the coming months and closely analyze Trichet’s outlook for economic recovery in the Eurozone.

Data released overnight revealed a worse than expected Q2 GDP reading, which declined by 0.2% on a quarterly basis versus a downwardly revised 2.5% contraction previously, while the revised annualized GDP reading revealed a 4.8% contraction, improving marginally from a 4.9% decline. Germany’s August industrial orders increased by more than expected, edging up to 1.4% compared with 3.1% from July.

EURUSD holds steady near 1.4675, with interim resistance eyed at 1.47, followed by 1.4740. Subsequent ceilings are seen at 1.4770, followed by 1.48 and 1.4850. On the downside, support begins at 1.4640, backed by 1.46 and 1.4550. Additional losses will be tempered at 1.4520, followed by 1.4880 and 1.4840.

Published on  Wed, Oct 7 2009, 22:12 GMT

Aussie Spikes on Surprise RBA Move

Tue, Oct 6 2009, 22:10 GMT
by Korman Tam

Forexnews.com

10/6/2009 2:10 PM: EUR/$..1.4716 $/JPY..88.80 GBP/$..1.5909 $/CHF..1.0264 AUD/$..0.8887 $/CAD..1.0600

Aussie Spikes on Surprise RBA Move

The dollar sold off sharply in the Tuesday session, tumbling to its lowest level against the Aussie since August 2008 at 0.8917 and slumping versus the Canadian dollar to its lowest level since September 2008 at 1.0549. Commodities climbed higher, with spot gold touching a fresh record high beyond the $1,040 per ounce level and crude oil edging up past the $72 per barrel level. The catalyst for part of the move was unsubstantiated rumors that the Mid East oil producing nations would soon abandon the US dollar as the pricing currency for oil.

The US economic calendar is light this week, with the reports due out toward the latter half of the week including weekly jobless claims, wholesale sales, wholesale inventories and the August trade deficit.
 
Aussie Surges on Surprise RBA Hike

The Australian dollar spiked to its highest level since August 2008 at 0.8917. The Reserve Bank of Australia caught markets off-guard with an unexpected 25-basis point rate hike in the early Tuesday session, triggering a sharp move from 0.8756 to 0.8843 minutes after the monetary policy announcement. In the subsequent press conference, RBA Governor Stevens sounded an optimistic tone on the global economic outlook, saying “the global economy is resuming growth” with the “prospects for Australia’s Asian trading partners appearing to be noticeably better”. Further, Stevens stressed that “growth in China has been very strong, which is having a significant impact on other economies in the region and on commodity markets”. Stevens expects economic growth in Australia to be “close to trend” in 2010, saying that “economic conditions in Australia have been stronger than expected and measures of confidence have recovered”.

AUDUSD continues to firm around the 0.89-level, holding onto the bulk of its rate hike triggered gains. Interim resistance is seen at 0.8920, followed by 0.8960 and 0.90. Subsequent ceilings are eyed at 0.9040, backed by 0.9070 and 0.91. On the downside, support starts at 0.8850, followed by 0.88 and 0.8760. Additional floors are seen at 0.8730, backed by 0.87 and 0.8665.

Published on  Tue, Oct 6 2009, 22:10 GMT

Jobs Disappoints, FX Whipsaws

Sun, Oct 4 2009, 21:54 GMT
by Korman Tam

Forexnews.com

10/2/2009 3:15 PM: EUR/$..1.4582 $/JPY..89.64 GBP/$..1.5906 $/CHF..1.0348 AUD/$..0.8647 $/CAD..1.0828

Jobs Disappoints, FX Whipsaws

The dollar was initially higher following the September labor report, rallying to 1.4481 against the euro and 1.5806 versus the pound sterling before relinquishing its earlier gains by the New York afternoon. US equities also recovered from its losses in the morning session, clawing their way back into positive territory, with the Dow Jones and Nasdaq up marginally.

Although the September unemployment rate was on par with consensus estimates, the reading still touched a fresh 26-year high at 9.8% versus August at 9.7%. The most disheartening component of the labor data was the non-farm payrolls report, which defied expectations for an improvement to a loss of 180k jobs, instead revealing a considerably larger loss of 263k jobs for September compared with a revised 201k jobs shed in the previous month. Meanwhile, average earnings edged up by less than anticipated, increasing by 0.1% compared with an upwardly revised reading of 0.4% in August and average workweek drifted lower to 33.0 hours from 33.1 hours.

The economic calendar for Friday also included durable goods orders and factory orders. The headline durable goods report declined by 2.6% in August, deteriorating further from the prior month’s 2.4% decline while core durable goods orders fell by 0.3% versus a flat reading previously. Factory orders fell by 0.8% for August, missing estimates for an increase of 0.3% from 1.3% in July.

Euro Regains Footing

The euro bounced back from its sharp sell-off to recover near the 1.46-level. Following the release of the non-farm payrolls figure, the euro sold off sharply against the dollar and yen, plunging by over 80-pips against the dollar to 1.4478 and losing over 100-pips versus the yen to 129.00.

EURUSD will encounter interim resistance at 1.46, followed by 1.4630 and 1.4670. Subsequent ceilings are eyed at 1.47, backed by 1.4740 and 1.4780. On the downside, support begins at 1.4540, followed by 1.45 and 1.4480. Additional losses will be tempered at 1.4450, backed by 1.44 and 1.4365.

Published on  Sun, Oct 4 2009, 21:54 GMT

USD Rallies on Soft Manufacturing Data

Wed, Sep 30 2009, 21:58 GMT
by Korman Tam

Forexnews.com

9/30/2009 2:50 PM: EUR/$..1.4656 $/JPY..89.56 GBP/$..1.6010 $/CHF..1.0348 AUD/$..0.8832 $/CAD..1.0675

USD Rallies on Soft Manufacturing Data

The greenback advanced against its major rivals in the Wednesday trading session, edging higher against the euro toward the 1.46-level, while pushing the pound sterling to beneath the 1.60-figure and briefly dragging the Swiss franc to a 3-week low at 1.0447. The catalyst for the dollar’s gains was a sharply weaker than forecast report on Chicago PMI. Consensus estimates were looking for the PMI report in edge up higher beyond the key 50-level to 52.0, instead falling to 46.1 in September from a 50-reading in the previous month. The employment component edged up slightly 38.8 from 38.7 in August and the new orders index slumped to 46.3 from 52.5 previously.

The markets largely reacted to the weaker manufacturing figures with the US equity bourses losing ground early in the session and the riskier currencies relinquishing previous session’s gains versus the dollar. The final release of Q2 GDP revealed an improvement to -0.7% from -1.0% in the previous reading while the GDP deflator remained unchanged. The Q2 GDP sales component improved to 0.7%, up from 0.4% previously. Meanwhile, the September ADP private sector payrolls revealed a loss of 254k, versus an upwardly revised loss of 277 jobs from August.

The key highlight this week continues to be Friday’s September labor report. The market is expected the unemployment rate to creep higher to 9.8%, up from 9.7% a month earlier. Non-farm payrolls are seen improving in September, with a loss of 188k jobs compared with 216k jobs shed in August.

Euro Slides Lower

The euro broke through the 1.46-level to 1.4570 earlier, but has since recovered back toward the 1.4640-figure. Germany’s September unemployment rate, released overnight, declined to 8.2% and beating estimates for an increase to 8.4% from 8.3% in August. In the coming session, traders will look ahead to Germany’s September manufacturing PMI, Eurozone September manufacturing PMI and Eurozone August unemployment rate.

EURUSD holds steady around 1.4650, with resistance seen at 1.4675, followed by 1.47 and 1.4750. Additional ceilings are eyed at 1.4780, backed by 1.48 and 1.4830. On the downside, support begins at 1.4630, followed by 1.46 and 1.4540.

Published on  Wed, Sep 30 2009, 21:58 GMT

Pound Gets Hammered by King

Thu, Sep 24 2009, 22:14 GMT
by Korman Tam

Forexnews.com

9/24/2009 3:46 PM: EUR/$..1.4663 $/JPY..91.18 GBP/$..1.6068 $/CHF..1.0292 AUD/$..0.8657 $/CAD..1.0886

Pound Gets Hammered by King

The greenback climbed higher against the majors amid weaker US data and a pullback in commodities prices. The major stock indexes drifted lower, with the Nasdaq and S&P 500 sliding by over 1% and the Dow Jones drifting lower by 0.5%.

Weekly jobless claims improved from the previous week, declining to 530k from 545k. However, August home sales eased up, slipping 5.1 million units from 5.3 million units a month prior.
 
Sterling Dragged Lower by Jawboning

The pound sold off sharply in the Thursday session as government jawboning hammered the currency against the euro and the dollar. The sterling plunged to its lowest level in 6-months at 91.55 and a 2-month low against the dollar at 1.6020. The catalyst for the sharp sell-off was comments from Bank of England that suggested a weaker currency would be beneficial to stabilizing the economy. UK Prime Minister Gordon Brown echoed a similar tone, saying “all factors that make for a stable economy” are welcome.

Cable trades just above the 1.6060-figure with interim resistance starting at 1.6080, followed by 1.61 and 1.6130. Subsequent ceilings are eyed at 1.6170, backed by 1.62 and 1.6240. On the downside, support starts at 1.6040, followed by 1.60 and 1.5960. Additional floors will emerge at 1.5930, backed by 1.59 and 1.5870.

Euro Slumps against USD

The euro tumbled lower to the 1.4620 mark versus the dollar amid a general slump in commodities and equities in the Thursday session. Germany’s September Ifo sentiment survey missed consensus estimates, improving to 91.3 instead of forecasts for an increase to 92.0 from 91.3. The Ifo expectations component improved to 95.7 from 95.0 in August, albeit less than the expected improvement to 96.5 and the current conditions index improved to 87.0 from 86.1.

The calendar for the coming session is light, with just the release of August M3 money supply, seen declining to 2.7% from 3.0%.

EURUSD holds steady around 1.4650, with resistance seen at 1.4675 and 1.47. Additional ceilings will emerge near 1.4740, followed by 1.4770 and 1.48. Losses will be tempered at 1.4630, backed by 1.46 and 1.4550. Subsequent floors are eyed at 1.4520 and 1.45.

Published on  Thu, Sep 24 2009, 22:14 GMT

Greenback Edges Higher

Mon, Sep 21 2009, 22:16 GMT
by Korman Tam

Forexnews.com

9/21/2009 3:15 PM: EUR/$..1.4678 $/JPY..92.08 GBP/$..1.6195 $/CHF..1.0322 AUD/$..0.8627 $/CAD..1.0774

Greenback Edges Higher

The dollar edged higher against the majors at the start of the week, pushing the euro to 1.4612 and the British pound to 1.6136. With the FOMC meeting this week, traders will closely scrutinize the Fed’s assessment of the economy in the accompanying policy statement. While interest rates are widely expected to remain on hold at 0.0%-0.25%, it will be interesting to note whether the Fed will provide clues on when markets can expect quantitative tightening to commence. The Fed will announce the results of its policy deliberation on Wednesday at 2:15 PM.

The economic calendar for Monday was light, with only the August leading economic indictors released. The figure fell short of expectations for an improvement to 0.7% and held steady from the previous month at 0.6%. The Tuesday session will see the September Richmond Fed survey and July home prices.

The US equity market was mixed with the Dow Jones and S&P 500 both drifting slightly lower, down by 0.4% and 0.3%, respectively, while the Nasdaq was up by 0.2%. Meanwhile, crude oil eased beneath the $70 per barrel level to $69.70 and spot gold held steady just above $1,000 per ounce.

Euro Dips

The euro eased toward the 1.46-level to a one-week low at 1.4612 amid a dearth of economic reports. Interim resistance is seen at 1.47, followed by 1.4740 and 1.4770. Subsequent ceilings are seen at 1.48, followed by 1.4830 and 1.4865. On the downside, support starts at 1.4630, followed by 1.46 and 1.4550. Additional floors will emerge at 1.4530, backed by 1.45 and 1.4470.

Published on  Mon, Sep 21 2009, 22:16 GMT

Pound Hit on BoE Easing Talk

Tue, Sep 15 2009, 22:14 GMT
by Korman Tam

Forexnews.com

9/15/2009 12:30 PM: EUR/$..1.4613 $/JPY..91.04 GBP/$..1.6432 $/CHF..1.0374 AUD/$..0.8593 $/CAD..1.0765

Pound Hit on BoE Easing Talk

The greenback was higher against the pound, rising to 1.64-figure and pushing the euro back towards the 1.46-level. Several key US economic reports were released this morning, including retail sales, producer price index and the New York Fed manufacturing survey. Retail sales in August were sharply higher than expected, with the headline figure jumping by 2.7% versus a revised 0.2% decline in July and the excluding automobiles retail sales report increasing by 1.1% compared with a revised 0.5% decline in the previous month. The September NY Fed manufacturing survey was also sharply better than forecast, rising to 18.88, beating calls for an improvement to 14.0 from 12.08 a month prior.

King pounds Sterling

The British pound plunged by over 200-pips in early Tuesday trading, slammed by commentary from Bank of England Governor Mervyn King. In King’s Parliamentary testimony, he hinted at further cutting the bank deposit rate, suggesting that the BoE was mulling over “reducing the remuneration” of bank reserves and that it would be a “useful supplement” to stimulate the ailing UK economy. While King expressed optimism that the sharp deterioration in economic fundamentals may have passed, he also added, “the strength and sustainability of the recovery is highly uncertain and the balance of risks to inflation around the 2% target remains on the downside”.

Economic data released from the UK overnight reaffirmed BoE Governor King’s outlook on inflation, with August CPI relatively tame, up 0.4% on a monthly basis and up 1.6% on an annualized basis. Meanwhile, the retail price index for August increased by 0.5% versus a flat reading in the previous month and posting a 1.3% decline versus a 1.4% drop a year earlier.

Cable stabilized just above the 1.64-level, hovering near 1.6430. Resistance is seen at 1.6460, followed by 1.65 and 1.6550. Additional ceilings are seen at 1.6580, backed by 1.66 and 1.6630. On the downside, support begins at 1.64, followed by 1.6370 and 1.6340. Subsequent floors are eyed at 1.63, followed by 1.6250 and 1.62.

Euro Sideways

The euro drifted sideways despite a softer than expected report on Germany’s sentiment survey, hovering just above the 1.46-level. Germany’s ZEW expectations survey jumped to its highest level in 3-years to 57.7 in September from 56.1 in August, albeit less than forecasts for a stronger improvement to 60.0. The ZEW current conditions index improved by less than forecast at -74.0, compared with -77.0 in the previous month and missing calls for an improvement to -68.0.

EURUSD holds steady around 1.46, with resistance beginning at 1.4650, followed by 1.47 and 1.4740. Additional ceilings will emerge 1.4770, followed by 1.48 and 1.4830. Support starts at 1.46, followed by 1.4560 and 1.4530. Subsequent floors are seen at 1.45, followed by 1.4450 and 1.44.

Published on  Tue, Sep 15 2009, 22:14 GMT

USD Edges Higher

Mon, Sep 14 2009, 22:23 GMT
by Korman Tam

Forexnews.com

9/14/2009 3:00 PM: EUR/$..1.4614 $/JPY..90.88 GBP/$..1.6574 $/CHF..1.0347 AUD/$..0.8607 $/CAD..1.0835

USD Edges Higher

The dollar edged up higher against the euro and sterling, while sliding against the yen at the start of the week. Oil and gold eased early in the session, slipping to $68.22 per barrel and $992.9 per ounce, while the US equity bourses were marginally higher.

The US economic calendar kicks off with several releases tomorrow, including August PPI, retail sales, July business inventory and the September NY Fed manufacturing survey. The headline retail sales figure is estimated to post a dramatic improvement in August, increasing by 1.2% versus a 0.1% decline a month prior, while the excluding-automobiles retail sales figure is seen rising by 0.3% from a 0.6% decline in July.
 
Euro Steady above 1.46

The euro pulled off its session highs near 1.4650 but held steady above the 1.46-figure. The Eurozone July industrial production figures improved to 2.1% versus 1.9% from the previous month, while improving to -15.9% from -17.0% a year prior. Meanwhile, Q2 employment declined by 0.5% on a quarterly basis, while falling by 1.8% on an annualized basis.

In the session ahead, the key highlight will be Germany’s ZEW sentiment survey is seen improving to -67.1 in September from -77.2 in August, while the economic sentiment component is estimated to improve to 62.0 from 56.1.

EURUSD will find support at 1.46, followed by 1.4570 and 1.4540. Subsequent floors are eyed at 1.45, backed by 1.4460 and 1.4420. On the upside, resistance begins at 1.4650, followed by 1.4680 and 1.47. Additional ceilings are seen at 1.4730, backed by 1.4760 and 1.48.

Published on  Mon, Sep 14 2009, 22:23 GMT

USD Slides vs GBP, CHF

Thu, Sep 10 2009, 21:55 GMT
by Korman Tam

Forexnews.com

9/10/2009 1:50 PM: EUR/$..1.4597 $/JPY..91.62 GBP/$..1.6666 $/CHF..1.0368 AUD/$..0.8638 $/CAD..1.0786

USD Slides vs GBP, CHF

The greenback was weaker against the British pound, falling to its lowest level in a month to 1.6676 and tumbling to its lowest level since December 2008 versus the Swiss franc at 1.0367. The US economic releases saw weekly jobless claims, which improved to 550k from 570k and the July trade deficit. The deficit figures revealed an increase in July to $31.96 billion versus the June reading at $27.49 billion.

The reports due out on Friday include July wholesale inventory, wholesale sales and the September University of Michigan consumer confidence survey. The preliminary confidence report is seen marginally lower to 65.3 from 65.7 while the current component edging up slightly to 67.0 from 66.6.

Sterling Rallies

The pound jumped to its highest level since August against the dollar at 1.6676 on the heels of the Bank of England’s monetary policy announcement earlier in the session. The BoE, as expected, held its benchmark lending rate unchanged at 0.5% and maintained its asset-purchase plan at its current level at 175 billion pounds.

Cable was initially softer just prior to the policy announcement as traders were factoring the possibility of a bump in the Bank’s asset purchase plan. When it was revealed that the BoE would stand pat, the market pushed the pound higher on hopes that the UK economy may be bottoming out and policy will likely remain unchanged for the coming months.

Interim resistance in the pair will emerge at 1.6675, followed by 1.67 and 1.6740. Subsequent ceilings are eyed at 1.6770, backed by 1.68 and 1.6830. On the downside, support starts at 1.6620, followed by 1.66 and 1.6560. Additional floors will emerge at 1.6530, backed by 1.65 and 1.6465.

Swissie Whipsaws on Intervention Fears

The Swiss franc whipsawed against the dollar and euro amid rumors that the SNB would intervene in the foreign exchange market to halt to currency’s strength. The SNB declined to comment on whether it had intervened, with traders pushing the Swissie higher from 1.0464 to its highest level since December 2008 at 1.0359.

Published on  Thu, Sep 10 2009, 21:55 GMT

USD Tumbles to Lowest Levels of 2009

Tue, Sep 8 2009, 22:03 GMT
by Korman Tam

Forexnews.com

9/3/2009 3:20 PM: EUR/$..1.4247 $/JPY..92.58 GBP/$..1.6319 $/CHF..1.0622 AUD/$..0.8392 $/CAD..1.1034

USD Edges Higher, Eyes Jobs

The dollar climbed higher against the majors on softer US economic reports, pushing the euro to 1.4245 and the Loonie toward 1.1072. Weekly jobless claims were unchanged from the previous week, missing forecasts for a decline to 560k, instead holding steady at 570k. Meanwhile, the August non-manufacturing ISM figure improved by more than forecast, edging up to 48.4 and beating estimates for an increase to 48.0 from 46.4 in the previous month.

The key highlight for this week will be the August labor data, scheduled for release at 8:30 AM on Friday. The market expects the August unemployment rate to creep up to 9.5% from 9.4% in July. The non-farm payrolls are expected to improve further to post a loss of 230k jobs, compared with 247k jobs shed a month prior.

The G-20 Finance Ministers meeting kicks off this weekend in London. US Treasury Secretary Tim Geithner had prefaced the meeting yesterday, saying “this is a stock-taking meeting not a new-initiatives meeting”, adding that “the important thing to do is to try to figure out what cooperative framework or phased differentiated withdrawal of support is going to be appropriate”. The agenda seems to be focused on European government curbs on banking bonuses.
 
Euro Drifts Lower

The euro drifted lower against the greenback, sliding to 1.4237. The ECB left monetary policy unchanged when it announced its decision earlier in the session, keeping rates steady at 1.0%. In the subsequent press conference by Bank President Trichet, he stressed that current interest rates remain appropriate, with inflation to remain subdued. Moreover, he said that there are increasing signs that the global recession is bottoming out and global policy stimulus should support growth. Trichet suggested that interest rates will likely remain unchanged for the medium-term, emphasizing inflation expectations are firmly anchored and that risks to growth outlook and inflation expectations remain balanced.

EURUSD holds steady near 1.4240, with support seen at 1.42, backed by 1.4160 and 1.4130. Subsequent floors are eyed at 1.41, followed by 1.4050 and 1.40. On the upside, resistance is seen at 1.4270, followed by 1.43 and 1.4350. Additional ceilings are eyed at 1.4380, backed by 1.44 and 1.4440.

Published on  Tue, Sep 8 2009, 22:03 GMT

USD Edges Higher, Eyes Jobs

Thu, Sep 3 2009, 22:16 GMT
by Korman Tam

Forexnews.com

9/3/2009 3:20 PM: EUR/$..1.4247 $/JPY..92.58 GBP/$..1.6319 $/CHF..1.0622 AUD/$..0.8392 $/CAD..1.1034

USD Edges Higher, Eyes Jobs

The dollar climbed higher against the majors on softer US economic reports, pushing the euro to 1.4245 and the Loonie toward 1.1072. Weekly jobless claims were unchanged from the previous week, missing forecasts for a decline to 560k, instead holding steady at 570k. Meanwhile, the August non-manufacturing ISM figure improved by more than forecast, edging up to 48.4 and beating estimates for an increase to 48.0 from 46.4 in the previous month.

The key highlight for this week will be the August labor data, scheduled for release at 8:30 AM on Friday. The market expects the August unemployment rate to creep up to 9.5% from 9.4% in July. The non-farm payrolls are expected to improve further to post a loss of 230k jobs, compared with 247k jobs shed a month prior.

The G-20 Finance Ministers meeting kicks off this weekend in London. US Treasury Secretary Tim Geithner had prefaced the meeting yesterday, saying “this is a stock-taking meeting not a new-initiatives meeting”, adding that “the important thing to do is to try to figure out what cooperative framework or phased differentiated withdrawal of support is going to be appropriate”. The agenda seems to be focused on European government curbs on banking bonuses.
 
Euro Drifts Lower

The euro drifted lower against the greenback, sliding to 1.4237. The ECB left monetary policy unchanged when it announced its decision earlier in the session, keeping rates steady at 1.0%. In the subsequent press conference by Bank President Trichet, he stressed that current interest rates remain appropriate, with inflation to remain subdued. Moreover, he said that there are increasing signs that the global recession is bottoming out and global policy stimulus should support growth. Trichet suggested that interest rates will likely remain unchanged for the medium-term, emphasizing inflation expectations are firmly anchored and that risks to growth outlook and inflation expectations remain balanced.

EURUSD holds steady near 1.4240, with support seen at 1.42, backed by 1.4160 and 1.4130. Subsequent floors are eyed at 1.41, followed by 1.4050 and 1.40. On the upside, resistance is seen at 1.4270, followed by 1.43 and 1.4350. Additional ceilings are eyed at 1.4380, backed by 1.44 and 1.4440.

Published on  Thu, Sep 3 2009, 22:16 GMT

Upbeat US Data amid Lackluster FX

Wed, Aug 26 2009, 22:13 GMT
by Korman Tam

Forexnews.com

8/26/2009 2:50 PM: EUR/$..1.4242 $/JPY..94.22 GBP/$..1.6238 $/CHF..1.0683 AUD/$..0.8288 $/CAD..1.0972

Upbeat US Data amid Lackluster FX

The dollar was mixed against the majors in the Wednesday session, largely confined within recent ranges in lackluster trading. The greenback recovered from its session lows versus the euro at 1.4350 to hover near the 1.4230-level, while pushing the Canadian dollar just shy of the 1.10-figure.

New home sales posted a strong reading in July, surging by its largest figure in nearly 4-years, up by 9.6% to 433k units versus 384k units from June. Building permits were drifted by 1.1% to 564k units in July. Meanwhile, durable goods orders were sharply better than expected, posting a gain of 4.9% versus a 2.2% decline a month earlier in June. The excluding transports July durable goods orders also improved, edging higher by 0.8% compared with a 1.6% increase a month earlier.

In the coming session, traders will look ahead to weekly jobless claims and more importantly, the preliminary reading for Q2 GDP. Weekly jobless claims are expected improve to 565k from 576k a week earlier. Meanwhile, economic growth in the second quarter is expected to post a 1.4% contraction, deteriorating further from a 1.0% contraction in the previous quarter. The Q2 PCE is expected to hold steady at 1.3%.
 
Euro Trades Sideways

The euro continues to hover around the 1.4240 figure after pulling back from the session high near 1.4350. Eurozone economic reports released overnight saw Germany’s August Ifo index improved by more than expected to 90.5 from 87.3 in July while the expectations index jumped to 95.0 from 90.4. Germany’s CPI figures are due out in early Thursday trading and are seen remaining tempered in August.

EURUSD trades sideways, remaining confined within recent ranges. Interim resistance is seen at 1.4270, followed by 1.43 and 1.4350. Subsequent ceilings are eyed at 1.4380, backed by 1.44 and 1.4440. On the downside, support begins at 1.42, followed by 1.4160 and 1.4120. Additional floors will emerge at 1.41, followed by 1.4065 and 1.4030.

Published on  Wed, Aug 26 2009, 22:13 GMT

FX Drifts, Focus on Central Banks

Mon, Aug 24 2009, 22:15 GMT
by Korman Tam

Forexnews.com

8/24/2009 1:30 PM: EUR/$..1.4304 $/JPY..94.41 GBP/$..1.6397 $/CHF..1.0609 AUD/$..0.8378 $/CAD..1.0762

FX Drifts, Focus on Central Banks

With little economic data released at the start of the week, the focus in the currency market has shifted to Central Bank rhetoric, with the key highlights attributed to commentary from Fed Chairman Ben Bernanke and ECB President Jean-Claude Trichet. Speaking from the Fed’s annual symposium in Jackson Hole, Wyoming, Bernanke offered an optimistic assessment over the economic outlook saying, “economic activity appears to be leveling out, both in the US and abroad, and the prospects for a return to growth in the near-term appear good”. His upbeat outlook spurred on gains in the equity and commodities markets, while pushing the dollar slightly lower against the majors.

Meanwhile, ECB President Trichet sounded a cautious tone over the economic outlook for the Eurozone, suggesting that interest rates will likely remain low for a protracted length of time. He said, “We see signs confirming that the real economy is starting to get out of the period of freefall”, yet it “does not mean at all that we do not have a very bump road ahead of us”.

Nonetheless, the major currency pairs continue to drift in a lackluster manner as the summer doldrums have confined foreign exchange to rangebound trading. We remain biased for further dollar weakness in the coming weeks as economic data from the US continue to gradually improve and support the equity markets.
 
Euro Drifts Lower

The euro was confined within range at the start of the week in a lackluster session, with the single currency drifting slightly lower against the greenback overnight. The economic data released saw June industrial orders, which posted a steep improvement, up 3.1% versus a 0.2% decline in the previous month and improving to -25.1% from -30.1%.

In the coming session, data slated for release include Germany’s import prices and Germany’s Q2 GDP. Growth in the Eurozone’s largest economy is seen expanding by 0.3% versus the previous quarter and contracting by 5.9% from the previous year.

EURUSD holds steady just beneath the 1.43-level with interim resistance seen at 1.4330, followed by 1.4360 and 1.44. Subsequent ceilings are eyed at 1.4440, backed by 1.4470 and 1.45. Support is seen at 1.4280, followed by 1.4230 and 1.42. Additional floors will emerge at 1.4150, followed by 1.41 and 1.4070.

Published on  Mon, Aug 24 2009, 22:15 GMT

USD Drifts Lower on Mixed Data

Thu, Aug 20 2009, 21:58 GMT
by Korman Tam

Forexnews.com

8/20/2009 2:00 PM: EUR/$..1.4248 $/JPY..94.06 GBP/$..1.6504 $/CHF..1.0634 AUD/$..0.8313 $/CAD..1.0878

USD Drifts Lower on Mixed Data

The major currencies were mixed in the Thursday session as US equities edged up marginally into positive territory, following a sharp rebound in the Shanghai Composite – which rallied by 4.52% overnight. The dollar eased lower against the euro and pound but largely remained confined within its recent range while the yen also relinquished some of its recent strength.

The Philadelphia Fed manufacturing index improved by more than forecast in August, expanding to a reading of 4.2 and beating estimates for an improvement to -2.0 from -7.0 in July. Meanwhile, the leading economic indicators index fell short of consensus forecasts for an unchanged monthly reading at 0.7%, instead slipping to 0.6%. Weekly jobless claims were also slightly higher than the prior week, edging up to 576k from 558k previously.

The economic calendar for Friday is light, with just the release of existing home sales due out at 8:30 AM. Existing home sales are seen increasing by 2.3% to 4.99 million units in July, versus 4.89 million units a month earlier.
 
Sterling Tops 1.66

The British pound climbed back above the 1.66-figure overnight following a stronger than expected report on UK retail sales in July. The report edged out expectations with annualized retail sales increasing by 3.3% versus 2.9% in the previous year and holding steady at 1.2% on a monthly basis. Also, the UK revealed its largest budget deficit on record at 8 billion pounds in July versus a 5.2 billion surplus a year earlier. The ballooning deficit figures will likely weigh heavily on the pound over the coming months.

Cable has since relinquished some of its earlier gains, slipping back to the 1.65-figure and lower from its session high at 1.6605. Support is seen at 1.6460, followed by 1.6430 and 1.64. Additional floors will emerge at 1.6370, backed by 1.6340 and 1.63. Meanwhile, interim resistance is eyed at 1.6550, followed by 1.66 and 1.6640. Subsequent ceilings are seen at 1.6670, followed by 1.67 and 1.6730.

Published on  Thu, Aug 20 2009, 21:58 GMT

US Equities Stabilize, USD Drifts Lower

Tue, Aug 18 2009, 22:17 GMT
by Korman Tam

Forexnews.com

8/18/2009 1:50 PM: EUR/$..1.4116 $/JPY..94.67 GBP/$..1.6556 $/CHF..1.0764 AUD/$..0.8240 $/CAD..1.1036

US Equities Stabilize, USD Drifts Lower

The dollar was lower in the Tuesday session, relinquishing previous session’s gains against the euro and sterling to slip to 1.4154 and 1.6572, respectively. The major US equity indexes stabilized following yesterday’s sell-off, with the Nasdaq recovering by over 1% and the Dow Jones and S&P 500 up by around 0.8% in afternoon trading.

Economic reports released earlier today saw softer housing market figures and weaker producer prices. Housing starts in July declined by 1.0% versus an upwardly revised June reading 6.5% to 581k units from 587k units previously. Building permits also fell, lower by 1.8% versus a 10% increase a month prior, falling to 560k units from 570k units. Meanwhile, headline producer prices posted a 0.9% monthly decline and a 6.8% annualized decline.
 
Euro edges above 1.41

The euro remained confined near its lows against the dollar and yen in early morning trading, holding steady around 1.4070 and 133.30, respectively. With traders largely on the sidelines and foreign exchange direction dictated by the equity markets, the euro failed to significantly recoup its previous session’s losses on the heels of a promising German sentiment survey.

Germany’s August ZEW economic sentiment index climbed to its highest level in over 3-years, sharply beating consensus forecasts for an improvement to 45.0, rising to 56.1 versus 39.5 from July. The current conditions component also improved by more than expected to -77.2, versus calls for an improvement to -85.0 from -89.3

EURUSD trades above the 1.41-figure with resistance seen at 1.4130 and 1.4160. Subsequent ceilings are seen emerging at 1.42, backed by 1.4240 and 1.4275. On the downside, support starts at 1.4070, followed by 1.4040 and 1.40. Additional losses will be tempered near 1.3970, followed by 1.3940 and 1.39.

Published on  Tue, Aug 18 2009, 22:17 GMT

Global Equity Slump Hits FX

Mon, Aug 17 2009, 22:01 GMT
by Korman Tam

Forexnews.com

8/17/2009 3:15 PM: EUR/$..1.4076 $/JPY..94.44 GBP/$..1.6333 $/CHF..1.0781 AUD/$..0.8224 $/CAD..1.1050

Global Equity Slump Hits FX

Fears over the sustainability of the global economic recovery hit the major equity indexes, with the Shanghai Composite index being pummeled by nearly 6% and Tokyo’s Nikkei index plunging by over 3%. Risk aversion was the key driver in the foreign exchange market on Monday, prompting a rally in both the dollar and yen. The greenback pushed the pound to its lowest level in one-month beneath the 1.63-level and the euro to a two-week low just beneath the 1.4050-handle. The US equity bourses tumbled at the start of the week, albeit faring better than their Asian counterparts. The Nasdaq led the declines, tumbling by over 2.5% while the Dow Jones was lower by 1.75% and the S&P 500 losing 2.15% by the afternoon session.

US economic reports released earlier today included the August NY Fed manufacturing survey, June TIC data, and the NAHB housing index. The NY Fed manufacturing survey improved by more than expected in August to 12.08, sharply beating forecasts for an improvement to 3.00 versus a reading of -0.55 from July. The June TIC report revealed net purchases of $71.3 billion versus revised net sales of $36.9 billion in the month prior. Meanwhile, the August NAHB housing index edged up in line with expectations to 18, versus 17 from July.

The calendar for Tuesday consists of July housing starts, building permits and the producer price index. Housing starts in July are expected to improve 600k units, up from 582k units in the previous month. Building permits are seen edging up to 580k units, versus 570k units in June. Meanwhile, headline PPI is estimated to decline by 0.3% from a 1.8% increase a month earlier and fall by 5.9% compared with a 4.6% drop in the previous year.

JPY Surges

Traders propped the Yen higher against the major currencies, dragging the euro lower to 132.53 and the pound to 153.52. Economic data from Japan revealed growth in the second quarter at 0.9% q/q and 3.7% y/y. Despite the upbeat figures, the Nikkei tumbled to its lowest level in 2-weeks, down by over 3% as traders questioned the sustainability of Japan’s economic rebound.

EURJPY hovers near the 133-figure and remains poised to further test the downside. Following last Tuesday’s break lower of the ascending trendline near the 138-level, the euro/yen pair has moved sharply lower, paving the way for additional losses to the 61.8% Fibonacci retracement of the move from 126.98 to 138.70, located at 131.40.

Published on  Mon, Aug 17 2009, 22:01 GMT

Confidence Drags Stocks, Props USD

Sun, Aug 16 2009, 21:54 GMT
by Korman Tam

Forexnews.com

8/14/2009 2:40 PM: EUR/$..1.4168 $/JPY..94.82 GBP/$..1.6489 $/CHF..1.0744 AUD/$..0.8281 $/CAD..1.1010

Confidence Drags Stocks, Props USD

The dollar and the yen climbed higher at the end of the week against the major currencies as the US equity bourses post steep losses. The greenback pushed the euro below the 1.42-handle and the pound beneath the 1.65-figure. Meanwhile, the yen pushed the euro to 134.22 and the pound to 156.06. By afternoon trading the Nasdaq was lower by over 1.8%, while both the S&P 500 and Dow Jones slipped by more than 1.5%.

The US economic reports released earlier in the session were mixed, with the data consisting of July CPI, industrial production, capacity utilization and the August University of Michigan consumer sentiment. Headline consumer prices missed consensus estimates, sparking fears of deflation with the monthly figure posting a flat reading versus a 0.7% increase in June and declining by 2.1% on an annualized basis from a 1.4% decline in the previous year. The industrial production reading beat forecasts in July, edging up by 0.5% reversing the 0.4% decline in June. Capacity utilization also edged up higher than expected, creeping to 68.5% and up from 68.0% from June. However, the University of Michigan consumer sentiment survey fell short of expectations, drifting to 63.2 in August from 66.0 in July while the expectations component slid to 62.1 from 63.2.

EURUSD fell to 1.4161 as risk aversion dragged the single currency lower across the board. Data released overnight revealed inflationary pressure in the Eurozone to be at a minimum, suggesting that the ECB will likely keep interest rates unchanged in the months ahead.

The pair will encounter interim support at 1.4130, followed by 1.41 and 1.4070. Subsequent floors are eyed at 1.4040, backed by 1.40 and 1.3965. On the upside, resistance is eyed at 1.42, followed by 1.4250 and 1.43.

Published on  Sun, Aug 16 2009, 21:54 GMT

FOMC Extends Asset Purchase Plan

Wed, Aug 12 2009, 22:01 GMT
by Korman Tam

Forexnews.com

8/12/2009 2:50 PM: EUR/$..1.4176 $/JPY..96.00 GBP/$..1.6476 $/CHF..1.0788 AUD/$..0.8304 $/CAD..1.0901

FOMC Extends Asset Purchase Plan

The Federal Reserve left interest rates unchanged as largely anticipated at 0%-0.25%, announcing that the decision was unanimous and deems current economic conditions to likely warrant exceptionally low levels of the federal funds rate for an extended period. The Fed said that “information received since the FOMC met in June suggests that economic activity is leveling out” and that “conditions in financial markets have improved further in recent weeks”.

The Fed extended its asset purchase plan, which was set to expire in September, saying “the Committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October”.
 
Sterling Recovers

The sterling rebounded in the New York session after sliding to a two-week low overnight at 1.6394 following the Bank of England’s quarterly inflation report. The BoE expects inflation to fall short of its target over the next three years, with Bank Governor King anticipating inflation to ease to 1% and remain beneath the 2% target until 2012. King explained the BoE’s move to increase the asset purchase plan by 50 billion pounds, saying the move was to preempt a prolonged period of below-target inflation. King said the BoE is “determined to bring inflation back to the target and it’s that which led the Bank to take action”, adding that the UK economy will be in a difficult position for some time to come. Lastly, King said the policy of asset purchases will continue until there are nascent signs of money growth and nominal spending in the economy recovering.

Cable edged back above the 1.65-figure to 1.6530, with resistance seen at 1.6560 and 1.66. Subsequent ceilings are eyed at 1.6640, backed by 1.6670 and 1.67. On the downside, support starts at 1.65, backed by 1.6450 and 1.64. Additional floors will emerge at 1.6375, followed by 1.6340 and 1.63.

Published on  Wed, Aug 12 2009, 22:01 GMT

USD Edges Up, Eyes FOMC

Tue, Aug 11 2009, 22:03 GMT
by Korman Tam

Forexnews.com

8/11/2009 3:20 PM: EUR/$..1.4146 $/JPY..96.00 GBP/$..1.6478 $/CHF..1.0816 AUD/$..0.8296 $/CAD..1.1012

USD Edges Up, Eyes FOMC

The dollar and yen were higher in Tuesday trading amid renewed declines in the equity bourses. The Nasdaq and the S&P 500 were lower by 1% and the Dow Jones softer by 0.75% in afternoon trading. Earlier US economic reports were mixed with Q2 labor costs falling by more than expected to -5.8%, compared with a negative revised Q1 figure at -2.7% and a sharply higher than forecast preliminary Q2 productivity reading, up by 6.4% versus a downwardly revised Q1 reading at 0.3%.

The FOMC kicked-off its two-day monetary policy meeting today and will be announcing its decision on Wednesday afternoon at 2.15 PM. The Fed is not seen changing interest rates from its current range of 0-0.25%. However, with the Treasury’s purchase plan set to expire in September, it will be interesting to see how the Fed will tackle the issue of extending the plan or permitting it to expire.
 
Sterling Remains under Pressure

The British pound drifted lower against the dollar, remaining mired beneath the 1.65-level to a session low around 1.6434. The UK June trade deficit was slightly larger than expected, increasing to 6.451 billion pounds, versus a revised May deficit of 6.174 billion pounds. The non-EU trade deficit edged up to 3.648 billion pounds compared with a downwardly revised 6.174 billion pounds in the previous month.

In the session ahead, traders will digest several key UK reports including the labor report and the Bank of England’s quarterly inflation report. The June ILO unemployment rate is estimated to edge up to 7.7% from 7.6% in the previous month and the July claimant count is seen rising to 28.0k versus 23.8k in June. Also to be closely scrutinized will be the BoE’s quarterly inflation report. Sentiment on the report is seen to be bearish for the pound following last week’s unexpected BoE quantitative easing through a 50 billion pound increase in the Bank’s asset purchase plan.

Cable hovers near 1.6475 with resistance starting at 1.65, followed by 1.6520 and 1.6560. Additional gains will emerge at 1.66, followed by 1.6640 and 1.6675. On the downside, support is seen at 1.6435, backed by 1.64 and 1.6370. Subsequent floors are eyed at 1.6340, followed by 1.63 and 1.6250.

Published on  Tue, Aug 11 2009, 22:03 GMT

Jobs Sparks USD, Stock Rally

Sun, Aug 9 2009, 22:01 GMT
by Korman Tam

Forexnews.com

8/7/2009 3:50 PM: EUR/$..1.4166 $/JPY..97.46 GBP/$..1.6669 $/CHF..1.0824 AUD/$..0.8354 $/CAD..1.0832

Jobs Sparks USD, Stock Rally

The dollar surged against the majors on the Friday session, rallying sharply against the euro from 1.4412 to 1.4156 and pushing the sterling to 1.6655. The catalyst for the steep move was the closely anticipated July jobs data. In sharp contrast to recent market behavior, the greenback’s strength coincided with a rally in the US equity markets. The major bourses were all higher by over 1.6%, with the S&P 500 advancing by 1.75% and the Dow Jones up more than 1.64%.

The July labor report unexpectedly improved for the first time in 15-months with the unemployment rate defying estimates for an increase to 9.7%, instead declining to 9.4% from 9.5% in June. Non-farm payrolls posted a drastic improvement, revealing a loss of 247k jobs, besting calls for a reading of -320k jobs, versus an upwardly revised June reading of 443k jobs lost.

The market action today challenges recent trade correlations, rewarding the greenback on improving sentiment that the US economy will be the first to recovery from the global economic recession. Nonetheless, the economic reports remain inconsistent but reinforce the prospects that the deterioration in fundamentals is slowing. The focus will now be on the two-day FOMC monetary policy meeting next week, with traders closely scrutinizing the Fed’s outlook for the economy.

EURUSD trades near 1.4170, with support starting at 1.4140, followed by 1.41 and 1.4060. Subsequent floors are seen at 1.4030 and 1.40. On the topside, resistance will emerge at 1.42, backed by 1.4230 and 1.4260.

Published on  Sun, Aug 9 2009, 22:01 GMT

GBP Tanks on BoE, Mkt Eyes NFP

Thu, Aug 6 2009, 22:03 GMT
by Korman Tam

Forexnews.com

8/6/2009 2:05 PM: EUR/$..1.4332 $/JPY..95.50 GBP/$..1.6754 $/CHF..1.0663 AUD/$..0.8370 $/CAD..1.0788

GBP Tanks on BoE, Mkt Eyes NFP

The dollar rallied sharply against the sterling, advancing by over 270-pips to 1.6759 while pushing the euro lower to 1.4336. Weekly jobless claims improved by more than expected, falling to 550k and larger than the expected drop to 580k from 584k a week earlier.

Traders will closely scrutinize tomorrow’s July labor report, due out at 8:30 AM. The unemployment rate is seen edging up to its highest level in over 20-years at 9.7%. Meanwhile, the non-farm payrolls reading is expected to improve sharply, posting a loss of 320k jobs, versus 467k jobs lost in June.
 
Sterling Plunges on BoE

The pound was sharply lower against the dollar on Thursday, tumbling by over 270-points from its session high at 1.7030 to break beneath the 1.68-level to 1.6759. The catalyst for the sell-off was the Bank of England’s monetary policy announcement earlier today. Although the BoE left interest rates unchanged at 0.5% -- which was largely expected, the Bank also announced an increase it its asset purchase program by 50 billion pounds to 175 billion pounds.

In the accompanying statement, the Bank stated that “in the UK, the recession appears to have been deeper than previously thought” while also adding that the “pace of contraction has moderated and business surveys suggest that the trough in output is close at hand”.

Cable remains mired beneath the 1.68-level, holding steady around 1.6775. Support starts at 1.6740 followed by 1.67 and 1.6660. Subsequent floors are eyed at 1.6620, backed by 1.66 and 1.6550.

Euro Dragged Lower

The ECB left monetary policy unchanged, as largely expected at 1.0%. In the accompanying press conference from Bank President Trichet, he downplayed the prospects for additional quantitative easing, saying rates were currently appropriate and adding that “the overall mood today is a little bit better than it was before”. Moreover, Trichet said that the Bank would rein back its lax monetary policy once it becomes clear the Eurozone economy has turned the corner. He added “there are increasing signs that the global recession is bottoming out”.

EURUSD continues to trade near the 1.4330-level, with support starting at 1.43, followed by 1.4270 and 1.4240. Subsequent floors are eyed at 1.42, backed by 1.4150 and 1.41. On the upside, resistance is seen at 1.4365, backed by 1.44 and 1.4435. Additional gains will target subsequent ceilings at 1.4470, followed by 1.45 and 1.4540.

Published on  Thu, Aug 6 2009, 22:03 GMT

US Data Disappoints

Wed, Aug 5 2009, 21:59 GMT
by Korman Tam

Forexnews.com

8/5/2009 3:10 PM: EUR/$..1.4426 $/JPY..94.95 GBP/$..1.7016 $/CHF..1.0601 AUD/$..0.8416 $/CAD..1.0692

US Data Disappoints

The greenback edged higher against the majors in the Wednesday session, pushing the euro beneath the 1.44-level and the sterling below the 1.70-figure as US equities drifted into negative territory. The economic reports released earlier in the session were largely worst than expected, with July ADP private sector payrolls and non-manufacturing ISM falling short of consensus estimates.

The July ADP private sector payrolls posted a loss of 371k jobs, exceeding calls for 340k, albeit improving from 473k a month prior. The July non-manufacturing ISM unexpectedly deteriorated to 46.4, falling short of estimates for an improvement to 48.0 from a month earlier at 47.0. Meanwhile, the headline durable goods orders for June improved to -2.2% versus -2.5% from May and factory orders rose by 0.4%, off from 1.2% a month earlier. Thursday’s data will see weekly jobless claims.

The key highlight will be Friday’s July labor report. The consensus forecast is for the unemployment rate to creep closer to the 10% figure at 9.7% in July versus 9.5% from June. The non-farm payrolls figure is expected to improve sharply, posting a loss of 320k jobs compared with 467k jobs lost a month earlier.
 
Euro Buoyed above 1.44

The euro recovered above the 1.44-level against the greenback after drifting lower earlier in the session. Economic reports from the Eurozone released overnight included Germany services PMI and Eurozone June retail sales. The retail sales figure declined by 0.2% on a monthly basis in June, which missed expectations for an improvement of 0.2% and declining by 2.4% versus a drop of 3.3% in the previous year. Germany’s July services PMI improved to 48.1 from 45.2, albeit less than the expected 48.4 improvement.

Traders will focus closely on the ECB monetary policy announcement in the early Thursday session. Although the ECB is seen leaving interest rates unchanged at 1.0%, the accompanying press conference from Bank President Trichet will be closely scrutinized for any clues on when the ECB will begin to rein in the quantitative easing.

EURUSD will find interim resistance at 1.4450, followed by 1.45 and 1.4530. Additional gains are eyed at 1.4565, backed by 1.46 and 1.4640. On the downside, support is seen at 1.44, backed by 1.4370 and 1.4340. Subsequent floors are eyed at 1.43, followed by 1.4250 and 1.42.

Published on  Wed, Aug 5 2009, 21:59 GMT

USD Plunges to Multi−Month Lows

Mon, Aug 3 2009, 21:59 GMT
by Korman Tam

Forexnews.com

8/3/2009 3:20 PM: EUR/$..1.4410 $/JPY..95.30 GBP/$..1.6922 $/CHF..1.0595 AUD/$..0.8412 $/CAD..1.0670

USD Plunges to Multi-Month Lows

The greenback tumbled to fresh multi-month lows against the euro at 1.4443 and the sterling at 1.6934 as traders move to break the major pairs out of recent ranges. With equities extending recent gains and commodities edging higher, the dollar remains under pressure amid a shift toward riskier assets. Optimism over a global economic rebound continues to improve, reinforcing sentiment that the worst of the recession may be over.

The week ahead will provide further insight into state of the US economy, providing fodder for equity market bulls and ultimately sending the dollar to fresh lows. The July manufacturing ISM report surged to its highest level since August 2008 at 48.9 versus 44.8 from June. The employment index rose sharply to 45.6 compared with 40.7 in the previous month.

The key highlights for foreign exchange traders this week will be a barrage of US economic reports, including personal consumption, personal income, pending home sales, durable goods orders and Friday’s key July labor report. The July unemployment rate is expected to climb higher to 9.7% from 9.5% in June. The non-farm payrolls report is seen improving sharply to post a loss of 340k jobs versus 467k jobs shed in June.

Also to be closely focused on will be the monetary policy decisions from the ECB and BoE. Although both central banks are expected to maintain interest rates at current levels, traders will closely scrutinize any commentary from Bank officials. The break-out has revealed vulnerability to the dollar’s downside and will likely set the tone for this week with momentum building against the greenback. The key level for the euro is 1.4338 with sustained gains likely to pave the way for a move toward the 1.4720-level – the spike high from December 18th, 2008.

EURUSD trades above the 1.44-level with resistance eyed at 1.4430, followed by 1.4470 and 1.45. Subsequent ceilings are eyed at 1.4540, backed by 1.4560 and 1.46. On the downside, support starts at 1.4370, followed by 1.4340 and 1.43. Additional floors will emerge at 1.4260, followed by 1.4230 and 1.42.

Published on  Mon, Aug 3 2009, 21:59 GMT

Global Equity Slump Props USD

Wed, Jul 29 2009, 21:56 GMT
by Korman Tam

Forexnews.com

7/29/2009 3:15 PM: EUR/$..1.4026 $/JPY..94.97 GBP/$..1.6366 $/CHF..1.0878 AUD/$..0.8144 $/CAD..1.0910

Global Equity Slump Props USD

Risk aversion propped the dollar higher against the majors in Wednesday trading amid a retreat in the global equity markets – with Shanghai’s Composite Index plummeting by 5% overnight. Commodities also slumped with gold falling to its lowest level in 2-weeks just above the $927 per ounce level and crude oil sliding to below $64 per barrel. The greenback pushed the euro toward the 1.40-figure and the Swiss franc around the 1.09-handle.

US economic reports released this morning saw durable goods orders decline sharply in June, posting a monthly decline of 2.5% versus a downwardly revised increase of 1.3% from May. The excluding transports durable goods orders improved to 1.1% compared with a downwardly revised 0.8% increase a month prior. The Fed’s Beige Book revealed the pace of economic decline had moderated or stabilized at a low level in most districts adding that the manufacturing sector remained subdued but slightly more positive than in the past. The Fed said there was still slack in the labor markets, with most sectors reducing jobs or holding steady and net employment falling.

Meanwhile, NY Fed President Dudley expressed optimism over the economy, saying he expects moderate growth in the second half of this year, albeit considerably slower than in past recoveries. Dudley said “the balance of risks is still tilted toward weakness in growth and employment and not toward higher inflation”, suggesting that the Fed will likely maintain low interest rates for some time to come. Lastly, he said that “if the recovery does, in fact, turn out to be lackluster, the unemployment rate is likely to remain elevated and capacity utilization rates unusually low” in the near-term.
 
Euro Tumbles to 1.40

The euro plummeted to a 2-week low just above the 1.40-figure as traders dumped riskier assets in favor of safe-haven currencies. In the coming session, economic data from the Eurozone consist of Germany’s July unemployment rate, unemployment change, Eurozone economic sentiment, business climate and consumer sentiment.

With the EURUSD pair failing to break above the upper range of its consolidation above the 1.43-level, the single currency could drift towards the lower trendline in the coming weeks, which rests near the 1.3930-figure.

Published on  Wed, Jul 29 2009, 21:56 GMT

USD Edges up as Stocks Drift

Mon, Jul 27 2009, 22:03 GMT
by Korman Tam

Forexnews.com

7/27/2009 2:40 PM: EUR/$..1.4238 $/JPY..95.10 GBP/$..1.6494 $/CHF..1.0696 AUD/$..0.8224 $/CAD..1.0812

USD Edges up as Stocks Drift

The greenback recovered from its earlier losses against the majors as the US equity bourses slipped into negative territory by afternoon trading. The dollar bounced off its near 2-month lows versus the euro near the 1.43-level and recovered slightly after touching a new 10-month low against the Canadian dollar at 1.0781.

The June new home sales report blew away consensus estimates, posting its largest advance in 8-years, increasing to 384,000 units and up 11% on the month. The data reinforced sentiment that the US economy is beginning to bottom out. The reports slated for release during the week include the Richmond Fed manufacturing survey, the Conference Board’s consumer confidence survey, durable goods orders, weekly jobless claims, Q2 GDP and the July Chicago PMI. Forecasts for this week’s reports predominantly reveal improving fundamentals, which are likely to be positive for stocks and detrimental to the dollar.
 
Euro Relinquishes Gains

The euro climbed just shy of the 1.43-handle against the dollar – its highest level in 7 ½-weeks early in the New York session before succumbing to pressure in the stock market and drifting toward the 1.42-figure. Economic reports from the Eurozone were better than expected with Germany’s GfK consumer sentiment survey rising for its 3rd consecutive month to a 14-month high at 3.5 in August, improving from 2.9 a month prior. Germany’s June import prices edged up by 0.4% in June, compared with a flat reading a month earlier and down 11.3% on an annualized basis versus a 10.4% decline a year earlier.

EURUSD holds steady near 1.4240, with interim resistance eyed at 1.4270 followed by 1.43 and 1.4340. Subsequent ceilings will emerge at 1.4365, backed by 1.44 and 1.4450. On the downside, support begins at 1.42, followed by 1.4170 and 1.4130. Additional losses will target 1.41, backed by 1.4050 and 1.4020.

Published on  Mon, Jul 27 2009, 22:03 GMT

Greenback Drifts Lower on Shift to Risk

Mon, Jul 20 2009, 21:57 GMT
by Korman Tam

Forexnews.com

7/20/2009 2:59 PM: EUR/$..1.4218 $/JPY..94.18 GBP/$..1.6531 $/CHF..1.0691 AUD/$..0.8150 $/CAD..1.1070

Greenback Drifts Lower on Shift to Risk

The dollar fell against the majors at the start of the week, sliding to a 6-week low against the euro at 1.4248 and a one-month low versus the Canadian dollar at 1.1023. The greenback came under pressure amid gains in the US stock market, which was prompted by news that troubled lender CIT would be bailed out by bond holders and thus avert bankruptcy.

The economic calendar saw the release of the June leading economic indicators, which declined by less than expected to 0.7%, beating calls for a decline to 0.5% versus 1.2% in May. The data slated for release this week will see May home prices, weekly jobless claims, June home sales and the July University of Michigan consumer sentiment survey.

The major fx pairs are likely to remain confined within range in the upcoming week with only a handful of reports slated for release. The key highlight will be Fed Chairman Bernanke’s Congressional testimony, which begins on Tuesday. Markets will be looking to Bernanke’s comments to Congress on how the FOMC will begin to rein in quantitative easing in order to quell nascent inflationary fears.
 
Loonie Jumps to One-Month High

The Canadian dollar rallied to its highest level since mid-June against the greenback around 1.1023, benefitting from advances in commodity prices. The Bank of Canada will announce the results of its monetary policy deliberation on Tuesday, with markets expecting the BoC to stand pat on interest rates at 0.25%. However, traders will focus closely for the Bank’s economic outlook and growth expectations. Also due out from Canada this week will be May retail sales.

USDCAD has declined sharply since its highs from July above the 1.17-figure, bringing the pair’s June low at 1.0782 back into sights. Support begins at 1.1030, followed by 1.10 and 1.0970. Subsequent floors are eyed at 1.0940, backed by 1.09 and 1.0850. On the topside, resistance will emerge at 1.11, followed by 1.1130 and 1.1180. Additional gains will target 1.12, backed by 1.1240 and 1.1270.

Euro Bounces above 1.42

The euro edged up to a 6-week high against the dollar as traders shifted back into riskier assets. The Eurozone reports due this week will see May industrial orders, current account balance, manufacturing PMI, Germany IFO, and Germany PMI.

EURUSD will face interim resistance at 1.4250, followed by 1.43 and 1.4330. Subsequent gains will emerge at 1.4365, backed by 1.44 and 1.4450. On the downside, support will begin at 1.42, followed by 1.4170 and 1.4130. Additional floors are seen at 1.41, backed by 1.4070 and 1.4030.

Published on  Mon, Jul 20 2009, 21:57 GMT

USD Holds Steady on Data

Tue, Jul 14 2009, 22:17 GMT
by Korman Tam

Forexnews.com

7/14/2009 11:30 AM: EUR/$..1.3964 $/JPY..93.11 GBP/$..1.6293 $/CHF..1.0866 AUD/$..0.7899 $/CAD..1.1360

USD Holds Steady on Data

The greenback recovered from earlier session lows against the majors at the start of Tuesday trading, pushing the euro off from above the 1.40-level to 1.3940 and the pound beneath the 1.63-figure.

US economic reports released earlier in the session were mixed, with both retail sales and producer prices higher than expected for June. The headline retail sales figure edged up by 0.6% and beating estimates for a decline to 0.4% from 0.5% in May. The excluding autos reading missed forecasts for an unchanged number at 0.5%, instead declining to 0.3%. The June producer price index was sharply higher than expected, posting a monthly increase of 1.8%, compared with consensus estimates for an increase to 0.9% from 0.2% and lower by 4.6% on an annualized basis versus a 5.0% decline previously. The core PPI figures revealed a monthly increase of 0.5%, versus a 0.1% decline a month earlier and a 3.3% jump on an annualized basis compared with 3.0% a year prior.

Although the highly anticipated earnings report from Goldman Sachs beat consensus estimates, the equity market had largely priced in strong earnings and drifted into negative territory at the open. The Dow Jones, Nasdaq and the S&P 500 were lower by nearly 0.4%. Declining equities pushed the dollar off its session lows, recovering from the 1.40-level to 1.3950 against the euro. Crude oil continued to hover near the $60 per barrel level.

The calendar on Wednesday consists of June CPI, real earnings, industrial production, and the July NY Fed manufacturing survey. Industrial production in June is expected to post a slight improvement from a 1.1% decline in May, declining by 0.6%, while the July NY Fed manufacturing
 
Euro Backs Away from 1.40

The euro traded above the 1.40-level to 1.4014 but quickly eased back toward the 1.3950-level, dragged lower by the equity bourses dipping into negative territory. The economic data released overnight saw the Eurozone industrial production report improve in May, up 0.5% versus a 1.9% decline a month earlier and decline by 17.0% compared with a 21.6% drop a year earlier. Meanwhile, Germany’s July ZEW sentiment survey was worst than expected, with the current conditions index at -89.3 compared with -89.7 previously and the economic sentiment lower to 39.5 from 44.8 in June.

EURUSD was little changed, with support beginning at 1.3930 followed by 1.39 and 1.3860. Subsequent floors are eyed at 1.3840, backed by 1.38 and 1.3750. On the upside, resistance is seen at 1.40, followed by 1.4040 and 1.4070. Additional ceilings will emerge at 1.41, backed by 1.4130 and 1.42.

Published on  Tue, Jul 14 2009, 22:17 GMT

USD Drifts Lower, Eyes Bank Earnings

Mon, Jul 13 2009, 21:54 GMT
by Korman Tam

Forexnews.com

7/13/2009 2:40 PM: EUR/$..1.3971 $/JPY..92.80 GBP/$..1.6208 $/CHF..1.0830 AUD/$..0.7808 $/CAD..1.1530

USD Drifts Lower, Eyes Bank Earnings

The greenback was mixed in the New York session as the US equity bourses dipped into negative territory in morning trading. With earnings season kicking off in earnest this week, the equity market is seen setting the tone for foreign exchange movements, as traders will likely push the dollar and yen higher on any dips in stocks. The financial sector will dominate the headlines as key earnings reports are due out from Goldman Sachs (Tuesday), JP Morgan Chase (Thursday), Citigroup and Bank of America (Friday).

Recent US economic reports have raised doubts over an imminent US economic recovery, thereby prompting a pullback in stocks and shifting the focus to corporate earnings. As a result, the greenback has continued to benefit from heightened risk aversion and will likely remained locked in a range over the coming weeks amid patchy US data.

The calendar for the coming week consist of June retail sales, PPI, real earnings, CPI, NY Fed manufacturing, industrial production, weekly jobless claims, July Philadelphia Fed manufacturing survey, June housing starts, building permits, and the July NAHB housing market index. The headline retail sales figure is estimated to slip to 0.4% in June, versus 0.5% from May, while the core retail sales reading is estimated to remain unchanged at 0.5%.
 
Euro Edges Higher

The euro consolidated just below the 1.40-level as traders took to the sidelines ahead of a barrage of earnings reports from financial firms this week. The Eurozone economic calendar is light this week, with markets focusing on the July Germany ZEW sentiment survey, May Eurozone industrial production, and June Eurozone HICP.

Germany’s July ZEW sentiment survey, due out on Tuesday at 5:00 AM, is expected to improve marginally to -85.8 from -89.7 from June. The economic sentiment is seen edging up to 47.8 from 44.8 a month earlier.

EURUSD holds steady near 1.3975 with interim resistance eyed at 1.40, backed by 1.4030 and 1.4070. Subsequent ceilings are eyed at 1.41, followed by 1.4140 and 1.4180. On the downside, support begins at 1.3950, followed by 1.3930 and 1.39. Additional floors will emerge at 1.3870, backed by 1.3840 and 1.38.

Published on  Mon, Jul 13 2009, 21:54 GMT

GBP Surges as BoE Unchanged

Thu, Jul 9 2009, 22:11 GMT
by Korman Tam

Forexnews.com

7/9/2009 1:00 PM: EUR/$..1.4039 $/JPY..92.94 GBP/$..1.6329 $/CHF..1.0763 AUD/$..0.7844 $/CAD..1.1610

GBP Surges as BoE Unchanged

The dollar lost ground against the euro and the sterling, relinquishing its gain from the previous session to fall to 1.4071 and 1.6379, respectively. The data released earlier included weekly jobless claims, wholesale sales and wholesale inventories. Weekly jobless claims improved to 565k, down from 614k a week earlier. The May wholesale inventories declined by less than estimated at -0.8% and improving from the April reading of -1.4%.
 
Pound Bounces on BoE

The British pound rallied sharply in London trading, prompted by the results of the Bank of England’s monetary policy decision and sending cable above the 1.63-level. The BoE left interest rates unchanged at 0.5% and announced that it would maintain its current asset purchase plan at 125 billion pounds. The Bank said it would “review the scale of the program again at its August meeting, alongside its latest inflation projections”.

The sterling rallied sharply against the dollar, surging to 1.6379 from 1.6023 in the Thursday session. Markets had pushed the pound sharply lower earlier in the week in anticipation of the Bank of England’s policy deliberations, with speculation for the BoE to further boost its asset purchase plan to stimulate the ailing UK economy.

The UK trade deficit improved by more than expected in May at 6.263 billion pounds, versus a 7 billion pound deficit in April. The non-EU trade deficit narrowed to 3.264 billion pounds, improving from 4.14 billion pounds a month prior. In the coming session, traders will turn to UK inflation data with June PPI due out at 4:30 AM.

Cable holds steady around the 1.6330-figure, with resistance seen at 1.6380, followed by 1.64 and 1.6440. Subsequent ceilings are eyed at 1.6460, backed by 1.65 and 1.6530. On the downside, support starts at 1.63, followed by 1.6265 and 1.6330. Additional losses will encounter floors at 1.63, backed by 1.6250 and 1.62.

Published on  Thu, Jul 9 2009, 22:11 GMT

JPY Advances on Safe Haven Gains

Wed, Jul 8 2009, 22:17 GMT
by Korman Tam

Forexnews.com

7/8/2009 10:55 AM: EUR/$..1.3904 $/JPY..94.12 GBP/$..1.6092 $/CHF..1.0896 AUD/$..0.7853 $/CAD..1.1614

JPY Advances on Safe Haven Gains

The dollar was mixed in the New York session; firmer against the euro toward the 1.39-region and weaker versus the yen near the 94-figure. The dearth of US economic data out today will keep the focus on stocks, which were marginally higher in early Wednesday trading as earnings season kicks off in earnest.
 
Euro Drifts Lower

The euro tumbled against the yen and dollar overnight, falling to 130.44 and 1.3861, respectively. The equity markets are still the key drivers of foreign exchange movements with lingering questions over the global economic recovery and bouts of heightened risk aversion dictating sentiment.

Economic reports released overnight from the Eurozone were mixed with revised Q1 GDP sharply worst than the preliminary figures. The report showed a sharp contraction in first quarter economic activity with GDP lower by 2.5% on a quarterly basis compared with an initial reading of a 1.8% decline, while the annualized growth figures showed a contraction of 4.9% versus a 1.7% contraction previously reported. Germany’s May industrial output posted its strongest surge in nearly 16-years, advancing by 3.7% compared with a downwardly revised 2.6% decline in April.

EURUSD edged back above the 1.39-figure following a higher open in the US equity bourses. Resistance starts at 1.3940, followed by 1.3975 and 1.40. Subsequent ceilings are eyed at 1.4050, backed by 1.41 and 1.4130. A breach beneath 1.39 will encounter support at 1.3860, followed by 1.3820 and 1.38. Subsequent floors will emerge at 1.3770, backed by 1.3740 and 1.37.

Yen posts Safe-Haven Gains

The yen rallied in Wednesday trading, climbing to its highest level since the end of May against both the euro and dollar. Safe-haven flows were the predominant catalyst for the advance in the Japanese currency with the Nikkei index plunging by 2.4% below the psychologically key 9500-level to 9420.75. Dragging the Tokyo index lower were a series of soft Japanese economic reports, suggesting that global economic downturn continues to weigh on the economy.

The current account surplus fell by 34.2% in May versus a 22.1% decline a year before. Meanwhile, core machinery orders tumbled by 3.0% in May to a record low, sharply missing consensus estimates for a 2.0% decline.

USDJPY trades just above the 94-figure, with support seen at 93.80 – the low from May 22nd, followed by 93.50 and 93. Additional floors will emerge at 92.60, backed by 92.30 and 92. On the upside, gains will encounter resistance at 94.50, followed by 94.75 and 95. Subsequent ceilings are seen at 95.40, backed by 95.80 and 96.

Published on  Wed, Jul 8 2009, 22:17 GMT

USD Advances as Equities Tumble

Tue, Jul 7 2009, 22:23 GMT
by Korman Tam

Forexnews.com

7/7/2009 1:00 PM: EUR/$..1.3948 $/JPY..94.95 GBP/$..1.6146 $/CHF..1.0863 AUD/$..0.7959 $/CAD..1.1630

USD Advances as Equities Tumble

The dollar advanced against the pound and the euro, rising to session highs by afternoon trading amid further losses in the US equity bourses. The Dow Jones, Nasdaq and S&P 500 were all lower by more than 1.2% as questions over the prospects for a global economic recovery continue to linger. Crude oil extended its losses and remaining mired beneath the $70 per barrel level, tumbling to $62.38 per barrel.

Safe haven flows continued to dictate direction in the foreign exchange market with the Australian dollar, euro and sterling tracking equities lower. Risk aversion will be the key driver of forex flows over the coming weeks as traders digest incoming economic reports to gauge the prospects for an economic rebound.
 
Euro Relinquishes Gains

The euro gave back earlier gains against the dollar and yen as US equities slid lower by mid-session. The euro was initially higher on the day following stronger than expected Eurozone economic data, which had bolstered the single currency past the 1.40-level against the dollar and near the 134-region versus the yen.

Economic data from Germany revealed a sharp improvement in factory orders for May, which surged at its strongest pace in nearly two years and far outpaced consensus estimates. The May factory orders reading spiked to 4.4%, beating forecasts for an improvement to 0.5% from a flat reading in April.

Germany’s Finance Minister Steinbrueck issued a cautionary statement, saying the enormous amounts of liquidity in the financial markets must be closely monitored, although inflation “currently isn’t problematic”. He said, “the question of how to get the toothpaste back into the tube or genie back into the bottle” must be dealt with so as not to provide fodder for the next crisis.

EURUSD dipped back below the 1.40-level, drifting to 1.3960. Support is seen at 1.3930, followed by 1.39 and 1.3860. Additional floors will emerge at 1.3835, backed by 1.38 and 1.3750. On the upside, resistance will emerge 1.40, followed by 1.4050 and 1.4075. Subsequent ceilings are eyed at 1.41, backed by 1.4140 and 1.4180.

Published on  Tue, Jul 7 2009, 22:23 GMT

Dollar Gains amid Risk Aversion

Mon, Jul 6 2009, 22:40 GMT
by Korman Tam

Forexnews.com

7/6/2009 12:00 PM: EUR/$..1.3932 $/JPY..95.09 GBP/$..1.6221 $/CHF..1.0876 AUD/$..0.7916 $/CAD..1.1617

Dollar Gains amid Risk Aversion

The dollar edged up higher against the majors at the start of the week amid declines in the global equity bourses as risk aversion returns on renewed worries over the economic recovery. The greenback pushed the euro beneath the 1.39-level to 1.3877 and the pound marginally below the 1.61-figure. Oil came under pressure as well, losing ground to its lowest level in five weeks to just above $64 a barrel.

The June non-manufacturing PMI was released earlier today, improving by more than expected, rising to 47.0 and beating estimates for a rise to 46.0 from 44.0 in May. The business activity component jumped closer to the key 50-level, edging up to 49.8 from 42.4 in the previous month while the employment index crept up to 43.4 versus 39.0. Meanwhile, the prices paid index rose past the 50-level -- the line in the sand to distinguish between expansion and contraction, to 53.7 in June, compared with 46.9.

The US economic calendar this week is light, consisting of weekly jobless claims, wholesale sales, wholesale inventory, trade deficit and the July University of Michigan consumer confidence report. Weekly jobless claims are estimated to ease slightly to 610k from 614k in the previous week. The trade deficit for June is seen expanding to $30.0 billion versus $29.16.

With the G8 Summit taking place in the latter half of the week in Italy, markets will pay close attention to any discussion over the dollar’s standing as the global reserve currency of choice. Russia and France both raised the prospects for a discussion at the G8 meeting regarding currencies. France’s economics minister Lagarde said a discussion should take place over “the medium term of the balance of exchange rates and the role of currencies that have changed both as a result of the crisis and the role played by emerging market countries”. Russian President Medvedev chimed in, saying “the dollar system or the system based on the dollar and euro has shown that they are flawed”, adding that “there should be more reserve currencies” and it is necessary “to think about the creation of regional reserve currencies”. Meanwhile, China’s Vice Foreign Minister He Yafei said “the US dollar is still the most important and major reserve currency of the day, and we believe that the situation will continue for many years to come”. Further, he reinforced the greenback’s role, saying while there has been talk of establishing a super sovereign currency, it remains a discussion among academics and that “it is not a position of the Chinese government”.
 
Pound Pummeled

The British pound regained some footing against the dollar by early afternoon trading, recovering from its 4-week lows hit earlier in the session at 1.6099. The Bank of England deliberates monetary policy with the results slated for release on Thursday at 7:00 AM. The BoE is largely expected to leave interest rates unchanged at 0.5%, but speculation that the Bank may boost its asset purchase plan to prop up the economy. As a result, the sterling will likely remain under pressure in the coming weeks.

Published on  Mon, Jul 6 2009, 22:40 GMT

Non−Farm Payrolls Prop up USD

Thu, Jul 2 2009, 22:18 GMT
by Korman Tam

Forexnews.com

7/2/2009 10:20 AM: EUR/$..1.4010 $/JPY..96.08 GBP/$..1.6340 $/CHF..1.0849 AUD/$..0.7949 $/CAD..1.1576

Non-Farm Payrolls Prop up USD

The greenback strengthened against the majors following the highly anticipated June jobs report, pushing the euro toward the 1.40-figure and the sterling to 1.6330. The US equity bourses fell sharply, with the Dow Jones, S&P 500 and Nasdaq all lower by over 2% in morning trading.

The June labor report was mixed with non-farm payrolls surging sharply higher than expected and closely tracking yesterday’s ADP private sector payrolls. The data revealed a loss of 467k jobs compared with estimates for a slight worsening to -363k from May at -345k. However, the unemployment rate climbed higher in June, albeit by less than consensus expectations for an increase to 9.6%, instead edging up to 9.5% from 9.4% a month earlier. Average earnings for the month were flat compared with an upwardly revised 0.2% reading in May, while the average workweek slipped marginally to 33.0 hours from 33.10 hours previously.

Also released today saw May durable goods orders unchanged from April at 1.8% and factory orders improve by more than estimates at 1.2% in May versus a downwardly revised April reading at 0.5%.
 
Euro Slides on Risk Aversion

The euro fell toward the 1.40-level as traders moved away from riskier assets, sending equities sharply lower. The European Central Bank announced the results from its policy meeting earlier in the session, leaving interest rates unchanged at record lows at 1.0%. In the subsequent press conference from Bank President Trichet, he said that current interest rate levels were appropriate and that he expects the Eurozone economy to rebound by mid-2010. Trichet said the risks to outlook are balanced, adding that the drop in June inflation was expected, reflecting temporary effects.

EURUSD trades just above the 1.40-level, with a break lower targeting initial support at 1.3960 followed by 1.3930 and 1.39. Subsequent floors will emerge at 1.3870, backed by 1.3840 and 1.38. On the topside, resistance starts at 1.4050, followed by 1.4080 and 1.41. Additional ceilings are seen at 1.4130, followed by 1.4160 and 1.42.

Published on  Thu, Jul 2 2009, 22:18 GMT

Confidence Hits Stocks, Buoys USD

Tue, Jun 30 2009, 22:11 GMT
by Korman Tam

Forexnews.com

6/30/2009 3:20 PM: EUR/$..1.4032 $/JPY..96.30 GBP/$..1.6455 $/CHF..1.0858 AUD/$..0.8061 $/CAD..1.1620

Confidence Hits Stocks, Buoys USD

Safe-haven moves dictated movements in the foreign exchange market, with the dollar strengthening against most of its counterparts and pushing the euro back toward the 1.40-figure. The US equity market slumped on economic reports released earlier in the session, with the Dow Jones and S&P 500 losing over 1%.

The data this morning included the April Case-Shiller home price index, the NY NAPM index, the June Chicago PMI and the June consumer confidence index. The April Case-Shiller home price index declined by less than anticipated, falling by 0.6% versus a 2.2% drop in the previous month and lower by 18.1% on the year, improving from an 18.8% decline a year prior. The Chicago PMI report for June was inline with consensus estimates at 39.0, albeit up from the May reading at 34.9. The employment component of the PMI increased to 28.9 versus 25.0 while new orders rose to 41.6 from 37.3 previously. The key element in today’s data that drove the markets lower was a disappointing report in the Conference Board’s June consumer confidence survey, which missed expectations for a marginal improvement to 55 from 54.9 in May, instead falling beneath the 50-level to 49.3 from a downwardly revised reading of 54.8 a month prior.

The economic calendar for the remainder of the holiday-shortened week includes the June ADP private sector payrolls report, May pending home sales, May manufacturing ISM, durable goods orders and on Thursday, the key June non-farm payrolls report, and the June unemployment rate. Tomorrow’s ADP private sector payrolls report will be closely scrutinized as a proxy for Thursday’s non-farm payrolls, with ADP estimated to improve to -411k versus the previous month at -532k. Meanwhile, the government report on Thursday will likely reveal a larger amount of jobs loss in June at -368k from 345k in May and the unemployment rate is expected to creep up further to a new multi-decade high at 9.4% from 9.2%.

The key highlight from the Eurozone this week will be the ECB monetary policy decision on Thursday morning. While no change is expected from the Bank, holding interest rates steady at 1.0% -- markets will closely scrutinize the subsequent policy statement from ECB President Trichet. It will be interesting to see how Trichet will address recent data, which revealed inflation rates falling into negative territory for the first time in 12-years. With the figures well below the ECB’s inflation mandate to keep target consumer prices just below 2%, Trichet will again have to address fears of deflation, which he has previously downplayed.

Published on  Tue, Jun 30 2009, 22:11 GMT

FOMC Unchanged

Wed, Jun 24 2009, 21:56 GMT
by Korman Tam

Forexnews.com

6/24/2009 2:40 PM: EUR/$..1.3916 $/JPY..95.65 GBP/$..1.6400 $/CHF..1.0997 AUD/$..0.7958 $/CAD..1.1528

FOMC Unchanged

The FOMC announced the decision from its two-day policy meeting, leaving interest rates unchanged by unanimous decision, as largely expected. The statement noted that “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period”. The Fed reiterated its outlook for improving conditions, saying recent evidence “suggests that the pace of economic contraction is slowing”. Concerns that the FOMC would tighten policy were abated, with the Fed saying “substantial resource slack is likely to dampen cost pressures” from recent increases in energy and commodity prices, but “the Committee expects that inflation will remain subdued for some time”.

The US economic data released earlier in the session included durable goods orders and new home sales. The durable goods orders report was sharply better than expectations, with the headline figure beating calls for a decline of 0.6% from an increase of 1.7% in April, instead, improving by 1.8% in May. The excluding transportation durable goods orders increased by 1.1% from a 0.4% increase a month prior. New home sales were softer than expected, lower by 0.6% to 342k units in May from 352k units previously.
 
Swissie Plunges on Intervention

The Swiss franc plunged sharply in Wednesday trading, losing nearly 4-big figures from 1.0635 to 1.1020 against the dollar and a fresh 3-month low versus euro at 1.5379. The sharp declines fueled further speculation that the Swiss National Bank was behind the moves, engineering the Swiss franc sharply lower by intervening in the foreign exchange market. Although the Bank of International Settlements, which would act on behalf of the SNB, declined to comment on whether it had been selling francs, the evidence was clear in the charts.

USDCHF spiked above the 1.10-level to its highest level in a month at 1.1020. The pair subsequently dipped to 1.0940 with support seen at 1.09, followed by 1.0840 and 1.08. A breach below will target 1.0760, backed by 1.0720 and 1.0650. Ceilings will emerge at 1.10, followed by 1.1020 and 1.1080. Subsequent resistance is eyed at 1.1150, backed by 1.12 and 1.1240.

Published on  Wed, Jun 24 2009, 21:56 GMT

Dollar Drifts Lower

Sun, Jun 21 2009, 22:09 GMT
by Korman Tam

Forexnews.com

6/19/2009 1:00 PM: EUR/$..1.3970 $/JPY..96.10 GBP/$..1.6485 $/CHF..1.0784 AUD/$..0.8070 $/CAD..1.1328

Dollar Drifts Lower

The greenback drifted lower against the major currencies in a quiet session to end the week, slipping toward the 1.40-level against the euro and 96-figure versus the yen. US equities were mixed with the Nasdaq edging higher to 15.53-points to 1823.18 while the Dow Jones slipped by 27.73-points to 8,528.25.
 
Germany ZEW Buoys EUR

The euro edged up slightly higher against the greenback on better than expected Eurozone data. Germany’s June ZEW sentiment survey unexpectedly surged to 44.8 – its highest level in 3-years, up sharply from 31.1 a month earlier and sharply beating estimates for an increase to 35.0. The current conditions component improved to -89.7 in June versus -92.8 in May. While the surge in ZEW propped the single currency higher, the euro was unable to sustain gains above the 1.40-level.

EURUSD holds steady near 1.3920 with support starting at 1.39, followed by 1.3880 and 1.3840. Additional support is seen at 1.38, backed by 13760 and 1.3730. On the topside, resistance is seen at 1.3950, followed by 1.3970 and 1.40. Subsequent ceilings are eyed at 1.4030, backed by 1.4060 and 1.41.

Aussie Surges

The Australian dollar jumped against the greenback, rallying from 0.7982 to 8117 as traders moved into riskier assets. Spot gold climbed higher, rising by $2.50 to $937.10 per ounce.

AUUDUSD trades at 0.8070. Additional gains will target resistance at 0.81, followed by 0.8140 and 0.8170. Subsequent ceilings are eyed at 0.82, followed by 0.8250 and 0.83. On the downside, support begins at 0.8030, followed by 0.80 and 0.7980. Additional floors are seen at 0.7950, backed by 0.79 and 0.7860.

Published on  Sun, Jun 21 2009, 22:09 GMT

USD Rallies Sharply

Mon, Jun 15 2009, 22:17 GMT
by Korman Tam

Forexnews.com

6/15/2009 3:24 PM: EUR/$..1.3785 $/JPY..97.72 GBP/$..1.6296 $/CHF..1.0922 AUD/$..0.7938 $/CAD..1.1322

USD Rallies Sharply

The greenback received a boost across the board at the start of the week, edging up to 1.3757 against the euro and 1.6245 versus the pound. Prompting the currency’s strength were comments from Russian Finance Minister Kudrin, in which he expressed confidence in the dollar as the global reserve currency of choice and that it would be premature to discuss an alternative. Recall several weeks ago, the dollar came under pressure following a series of comments from both Russian and Chinese government officials calling for a new global currency to replace the greenback given the deteriorating fiscal position.

US equity bourses posted steep losses, with the Dow Jones, Nasdaq and S&P 500 plunging by well over 2%. The economic calendar was largely negative today, with the June NY Fed manufacturing index deteriorating by more than expected to -9.41 versus May at -4.55. The April overall net capital flows revealed a net outflow of $53.2 billion, versus an inflow of $23.2 billion in the month prior. The June NAHB housing market survey missed estimates for an improvement to 17, instead dipping to 15 from 16 in May.

Key data slated for release in the Tuesday session include May PPI, building permits, housing starts, and industrial production. The headline producer price index in May is seen edging up to 0.4%, from 0.3% a month earlier and remain unchanged from the previous year at -3.7%. Core PPI is estimated to hold steady at 0.1% m/m and 3.2% y/y. Traders have continued to focus on housing reports for signs that the housing market has begun to bottom. The May housing starts are expected to improve to 490k units, compared with 458k units a month earlier while building permits are forecasted to edge up to 500k units from 498k units previously.. Meanwhile, May industrial production is seen holding steady from the previous month, posting a 0.5% decline.
 
Euro Stumbles

The euro fell sharply amid broadbased USD strength in the Monday session, tumbling to near one-month low at 1.3754. The Eurozone employment figures released overnight saw Q1 employment decline by 0.8% versus a 0.3% drop in the previous quarter while falling by 1.2% on an annualized basis.

The euro trades just beneath the 1.38-level, with support seen emerging at 1.3760, followed by 1.3720 and 1.37. Subsequent floors are eyed at 1.3650, backed by 1.36 and 1.3580. On the topside, gains will encounter resistance at 1.38, followed by 1.3840 and 1.3875. Additional ceilings are seen at 1.39, followed by 1.3940 and 1.3980.

Published on  Mon, Jun 15 2009, 22:17 GMT

US Confidence at 9−mth High, USD Mixed

Sun, Jun 14 2009, 22:09 GMT
by Korman Tam

Forexnews.com

6/12/2009 3:00 PM: EUR/$..1.4016 $/JPY..98.25 GBP/$..1.6448 $/CHF..1.0784 AUD/$..0.8134 $/CAD..1.1180

US Confidence at 9-mth High, USD Mixed

The greenback received a boost ahead of this weekend’s G8 Finance Minister’s meeting, with Japan’s FinMin Yosano jawboning the currency higher. In light of recent speculation among Chinese and Russian government officials touting the need for a new global currency given the deteriorating US fiscal outlook, Japan’s Yosano expressed confidence in US Treasuries – calling his nation’s trust in US debt “absolutely unshakeable”.

The University of Michigan consumer confidence survey, released earlier today climbed to its highest level in 9-months but was largely mixed against consensus estimates. The June preliminary conditions index sharply beat expectations, printing at 74.5, versus calls for an improvement to 68.5 from 67.7. The expectations component disappointed, slipping to 65.4 and missing estimates for a gain to 72.0 from 69.4 in May while sentiment survey edged up by less than forecast to 69.0 from 68.7 previously.
 
Euro Recovers above 1.40

The euro trades above the 1.40-level after swinging lower from 1.4134 to 1.3937. Economic data from the Eurozone pointed toward continued weakness in fundamentals, with April industrial production deteriorating more than expected. The April industrial production fell by 1.9%, versus calls for a smaller decline at 0.4% from March at -2.0%, while on an annualized basis, industrial production plunged by 21.6% from a 20.2% decline in the previous year.

EURUSD finds support at 1.3970, followed by 1.3940 and 1.39. Subsequent floors are seen at 1.3850, backed by 1.38 and 1.3765. On the topside, resistance is seen at 1.4040, followed by 1.4070 and 1.41. Subsequent ceilings are eyed at 1.4130, followed by 1.4165 and 1.42.

Published on  Sun, Jun 14 2009, 22:09 GMT

USD Surges Despite Twin Deficit Data

Wed, Jun 10 2009, 22:31 GMT
by Korman Tam

Forexnews.com

6/10/2009 2:55 PM: EUR/$..1.3972 $/JPY..98.12 GBP/$..1.6307 $/CHF..1.0816 AUD/$..0.8008 $/CAD..1.1087

USD Surges Despite Twin Deficit Data

The dollar sharply rallied against the euro and sterling, reversing yesterday’s losses and climbing to 1.39 versus the euro and 1.6242 against the sterling. The 10-year Treasury note edged up toward the 4% level, reflecting underlying fears of forthcoming rate hikes, while the major US equity bourses slid by nearly 1%.

Traders analyzed the US twin deficit data released earlier in the session. The April trade deficit was slightly higher than expectations, edging up to $29.16 billion, from an upwardly revised $28.5 billion from March. US exports slid to its lowest level in 3-years, falling by $2.2 billion to $121.1 billion, while imports fell by $2.2 billion to $150.3 billion. The US Treasury released the May budget deficit earlier, revealing a record $189.5 billion deficit – higher than forecast and up from a $165.93 billion budget deficit a year earlier. The 2009 fiscal deficit climbed closer to the $1 trillion at $991.95 billion.

The Federal Reserve’s Beige Book said economic conditions in the 12 Fed districts either remained weak or worsened through May. The report saw five districts acknowledging the downward trend beginning to show signs of moderating while some districts said there are nascent signs that job losses may be moderating. The Fed said districts mostly saw prices at all stages of production to be generally flat or falling, with the notable exception to downward pricing pressures is the widely reported increase in the price of oil. The Beige Book also noted that retail spending remained soft and that real estate markets continued to deteriorate in all districts.

The economic calendar for Thursday consists of May retail sales, weekly jobless claims, and business inventories. The upbeat consumer confidence survey from yesterday bodes well for retail sales with improved sentiment likely to result in increased consumer spending. The headline May retail sales report is expected to reverse a 0.4% decline in April to improve by 0.2%. The core retail sales figure is seen increasing by 0.3% in May, improving markedly from a 0.5% decline in the previous month. Weekly jobless claims are expected to improve to 615k, down slightly from a week earlier at 621k. Lastly, April business inventories are expected to post a 0.8% decline, improving marginally from a 1.0% decline in March.

Yen Slips ahead of GDP

In the coming session, Japan’s revised Q1 GDP will be released, with consensus estimates looking for a slightly improved 15% annualized decline from the previous figure of 15.2%. The quarterly figure is estimated to remain unchanged, revealing a Q1 economic contraction of 4.0% on the quarter. The data will reiterate current challenging economic conditions facing the world’s second largest economy. Also to be released on Thursday will be capacity utilization, industrial output and consumer confidence.

Published on  Wed, Jun 10 2009, 22:31 GMT

USD Extends Gains

Mon, Jun 8 2009, 22:19 GMT
by Korman Tam

Forexnews.com

6/8/2009 2:45 PM: EUR/$..1.3874 $/JPY..98.52 GBP/$..1.6033 $/CHF..1.0925 AUD/$..0.7864 $/CAD..1.1194

USD Extends Gains

The greenback traded higher in the London session, starting the week where it left off from last Friday, extending its gains from the stronger than expected May non-farm payrolls report. The dollar pushed the euro to 1.3805 and the pound toward the 1.58-figure before relinquished some of its strength in New York trading. The major equity bourses traded lower, with the Dow Jones, Nasdaq and S&P500 down by around 1%, while both spot gold and crude oil drifted lower as well.

There has been speculation that the recent data, particularly the May non-farm payrolls report, point toward a bottom in the economic downtown – prompting an advance in the dollar and declines in stocks amid inflationary concerns. The Fed’s current monetary policy remains highly stimulative and we believe it will remain so for the remainder of the year and into early 2010. Thus, we deem it to be premature for markets to begin pricing FOMC rate hikes.

The economic calendar from the US will see on Tuesday, April wholesale inventories, wholesale sales, on Wednesday: the April trade deficit and May Federal budget, on Thursday: weekly jobless claims, May retail sales, April business inventories and on Friday: the June University of Michigan consumer confidence survey and May import / export prices. Retail sales for May are expected to reverse the 0.4% decline in April, improving by 0.2%, while the core retail sales figure is seen edging up by 0.3% from a 0.5% decline a month earlier. The April trade deficit is estimated to edge up to $29.0 billion from a month earlier at $27.58 billion. The Federal budget deficit is expected to surge in May to 195.0 billion compared with $165.93 billion in April. The dollar may come under pressure toward the latter part of the week as the twin deficits come into focus, likely to trigger some profit-taking in the latest greenback run-up.
 
Euro Drifts

The euro remained under pressure against the dollar and yen, dropping to 1.3805 and 136.01, respectively. A shift to risk aversion has dragged the euro lower across the board, despite hawkish earlier commentary from ECB Board member Stark. He reiterated the Bank’s mandate, saying “maintaining price stability will remain the only objective that guides the ECB’s decisions”. Stark said the current accommodative monetary policy will be reversed when the recovery starts with price risks still to the upside. He was also upbeat, adding that the Eurozone economy is no longer in free fall and beginning to see the first signs of stabilization.

EURUSD hovers beneath the 1.39-level with support starting at 1.3875, followed by 1.3830 and 1.38. Additional floors are eyed at 1.3760, backed by 1.3730 and 1.37. On the upside, resistance is eyed at 1.39, followed by 1.3940 and 1.3980. Subsequent ceilings are eyed at 1.40, backed by 1.4050 and 1.41.

Published on  Mon, Jun 8 2009, 22:19 GMT

Sharply Improved NFP Propel USD

Sun, Jun 7 2009, 22:03 GMT
by Korman Tam

Forexnews.com

6/5/2009 1:15 PM: EUR/$..1.3988 $/JPY..98.10 GBP/$..1.6004 $/CHF..1.0862 AUD/$..0.7982 $/CAD..1.1148

Sharply Improved NFP Propel USD

The markets whipsawed sharply this morning following the release of the highly anticipated May US jobs data. Non-farm payrolls triggered a steep spike in riskier assets with the euro surging by nearly 100-pips against the dollar to 1.4266 within minutes of the release and the Dow Jones equity futures gaining by over 100-pts. Consensus estimates were looking for a loss of 520k jobs in non-farm payrolls for May. Instead, the data revealed a sharply improved reading at -345k jobs versus an upwardly revised 504k jobs shed in April. The unemployment rate, however, spiked to its highest level since 1984 by more than forecast to 9.4% in May, versus 8.9% a month earlier.

As traders digested the economic reports, the dollar reversed all of its losses and rallied sharply across the board – propelling nearly 3-cents against the euro from its session lows at 1.4266 to 1.3974. The equity bourses opened flat on the session, retreating from its pre-market levels and edging up marginally in morning trading. Crude oil jumped higher in the morning, briefly flirting with the $70 per barrel level before backing off toward $69.20 per barrel. Meanwhile, spot gold drifted lower, slipping toward $963 per ounce.

Canada also released its labor report for May earlier today. The unemployment rate was higher than forecast, edging up to 8.4% -- its highest level in 11-years and up from 8.0% in April. The May employment change revealed a loss of 41.8k jobs, more than the 33.0k loss forecast.
 
Euro Plunges on Sharp Reversal

EURUSD has stabilized from its 3-cent freefall earlier this morning, regaining its footing above the 1.40-level. Succumbing to broadbased dollar strength, the single currency sharply relinquished its initial non-farm payrolls advance to sink to 1.3974.

With no economic data released from the Eurozone overnight, markets assessed the June monthly report from Germany’s Bundesbank. The report revealed expectations for Germany’s economy to contract by 6.2% in 2009 and remain flat in 2010, with the forecasts being “a reflection of the massive economic downturn”. The Bundesbank expects the German economy to stabilize by Q3 of this year with “downward pressure on the economy likely to ease during the course of 2009, although it does not look like there will be a significant upturn in the near future”.

Published on  Sun, Jun 7 2009, 22:03 GMT

Rumors Pound Sterling

Thu, Jun 4 2009, 22:43 GMT
by Korman Tam

Forexnews.com

6/4/2009 4:05 PM: EUR/$..1.4180 $/JPY..96.72 GBP/$..1.6184 $/CHF..1.0687 AUD/$..0.8024 $/CAD..1.0970

Rumors Pound Sterling

The greenback jumped sharply higher against the sterling and euro on rumors circulating earlier in the session over uncertainty over the UK political outlook. The dollar relinquished some of its strength to trade near 1.4180 versus the euro and 1.6190 against the pound.

The key May jobs data is due out tomorrow at 8:30 AM and traders will closely analyze the data to gauge the extent of the deterioration in the labor market. The unemployment rate is seen edging up further to 9.2% from 8.9% a month earlier while the non-farm payrolls are expected to post another loss of 520k jobs from 539k loss lost in April.

If the unemployment report is sharply better than expected, the likely scenario to materialize would be a rally in the US equity bourses, prompting a return to riskier assets which would ultimately be detrimental to the dollar.
 
Sterling Collapses on Rumor

The British pound collapsed by over 3-cents against the dollar, plummeting from 1.6340 to 1.6088 within minutes after 8:00 AM. The catalyst for the sell-off was the rumor that UK Prime Minister Gordon Brown would be stepping down. The sterling recouped some of its losses, recovering by over 100-pips following the rebuttal from PM Brown’s office, which dismissed the rumors of his resignation as “absolute nonsense”.

The Bank of England announced the results of its monetary policy announcement earlier in the session, leaving rates unchanged at record lows at 0.5%, in line with consensus estimates. The BoE said it would maintain its 125 billion asset-purchasing program and expects it to be completed in two months, with the scale to be kept under review. Data released overnight also saw UK Halifax home prices unexpectedly increase by 2.6% on a monthly basis, beating calls for a decline of 1.0%, while the annualized home price index posted a better than anticipated decline of 16.3% compared with 17.7% in the previous year.

In the session ahead, UK PPI data will be released. The headline May PPI input prices index is expected to increase by 0.7% reversing a 1.0% decline a month earlier while sliding by 8.3% on a yearly basis versus a 5.0% drop previously.

Euro Whipsaws

The euro was hit by the rumor-triggered collapse in the sterling, tumbling sharply to 1.4069. However, the single currency quickly recovered and traded briefly above the 1.42-handle before settling around the 1.4170-region by the New York afternoon.

The ECB, as expected, left its benchmark lending rate unchanged at 1.0%, with Bank President Trichet saying interest rates are currently “appropriate”. The euro received further boost as Trichet suggested that the ECB is no longer contemplating additional covered bond purchases. He said risks on the downside include the outlook for the economy and that he expects inflation rates to return to positive territory by the end of the year. Trichet anticipates the average growth level to be at zero or just beneath in 2010.

Published on  Thu, Jun 4 2009, 22:43 GMT

Greenback Rallies Sharply

Wed, Jun 3 2009, 22:21 GMT
by Korman Tam

Forexnews.com

6/3/2009 3:55 PM: EUR/$..1.4140 $/JPY..95.95 GBP/$..1.6280 $/CHF..1.0708 AUD/$..0.7984 $/CAD..1.1094

Greenback Rallies Sharply

The greenback reversed previous session’s losses, rallying sharply against the euro by over two big figures to 1.4111 and the sterling by nearly four big figures at 1.6244. US equities bourses pulled back further with the Dow Jones and Nasdaq sliding by over 1.2%, while the S&P 500 lost over 1.8%.

With markets eagerly anticipating the May US labor report due out on Friday, the May ADP private-sector payrolls were worst-than-expected, posting a loss of 532k jobs and exceeding expectations for a loss of 520k jobs from 491 private sector jobs lost previously. April durable goods orders increased by 1.7%, albeit less than the 1.9% increase from March, while factory orders improved by 0.7% from 0.9%. The May non-manufacturing ISM report improved to 44 versus 43.7 a month earlier, remaining beneath the key 50-level though.

Data slated for release on Thursday include weekly jobless claims, Q1 labor costs and non-farm productivity. The key reports will be released on Friday, consisting of the May unemployment rate, which is seen creeping up to 9.2% and the non-farm payrolls reading, expected reveal a 520k job loss from 539k loss of jobs a month earlier.
 
Euro Tumbles toward 1.41

The euro relinquished all of Tuesday’s gains versus the dollar, plunging to 1.4111 in the New York session. The economic reports released from the Eurozone overnight were mixed. Germany’s May services PMI improved by less than expected, increasing to 45.2 from 43.8, albeit less than estimates for an increase to 46.0. The Eurozone May services PMI edged higher to 44.8 from 43.8 in April, while the composite PMI improved to 44.0 from 41.1 a month earlier.

Meanwhile, the revised Q1 Eurozone GDP figure was on par with expectations, revealing a contraction of 2.5% from 1.6% on a quarterly basis. The annualized GDP declined by 4.6%, worst than expectations for a decline of 4.4% from a 3.1% in the previous year.

In the coming session, traders will scrutinize April retail sales data, which are seen reversing the March decline of 0.6%, increasing by 0.2% from the previous month while improving to -3.2% compared with -4.2% a year earlier. The key highlight will be the ECB monetary policy announcement at 7:45 AM. The Bank is not expected to change policy, holding rates steady at 1.0%. The subsequent press conference by ECB President Trichet will be interpreted for clues on whether additional policy easing can be expected over the coming months.

Published on  Wed, Jun 3 2009, 22:21 GMT

Dollar Tumbles to '09 Lows

Tue, Jun 2 2009, 22:18 GMT
by Korman Tam

Forexnews.com

6/2/2009 2:49 PM: EUR/$..1.4316 $/JPY..95.62 GBP/$..1.6577 $/CHF..1.0605 AUD/$..0.8220 $/CAD..1.0804

Dollar Tumbles to ’09 Lows

The greenback slid across the board in the Tuesday session, tumbling to its lowest level of the year against the euro at 1.4321 and a seven month low versus the pound at 1.6590. The dollar remains under pressure amid renewed skepticism over its position as the world’s reserve currency, with comments from Russian President Medvedev reiterating his proposal for a new global currency.

Dallas Fed President Richard Fisher expressed optimism, saying the Fed has been successful in pulling the economy back from the brink and is beginning to see the results from its efforts to support the credit markets. Although he said the US economy is “getting less worse” with time, he believes it is still “not out of the woods” and expects the recovery to be very slow. He did offer a somewhat upbeat assessment, saying consumer confidence was picking up somewhat and retail sales was no longer plunging. Fisher said the aggressive action adopted by the Fed helped stave off the worse of the US downturn.

The US data released earlier in the session was better than expected. The April pending home sales sharply beat expectations for an increase of 0.5% from the March reading at 3.2%, instead posting highest increase since 2001, advancing by 6.7%.

The calendar for Wednesday consists of the May ADP private sector employment report, April durable goods orders, May manufacturing ISM, April factory orders and new goods orders.
 
Euro Strengthens Despite Data

The euro jumped to its highest level against the dollar in 2009 at 1.4321 amid broadbased selling in the greenback. Eurozone economic data released overnight revealed a spike in the unemployment rate to its highest level in 10-years at 9.2%, slightly higher than forecasts for 9.1% from 8.9% in the previous month.

The key highlight from the Eurozone this week will be the ECB’s monetary policy on Thursday. While the Bank is not expected to change interest rates from 1.0%, the subsequent policy statement from Bank President Trichet will be closely scrutinized for clues on whether the ECB intends to further ease policy over the coming months or if there are plans for additional bond purchases.

Published on  Tue, Jun 2 2009, 22:18 GMT

Aussie, Euro Surges vs USD

Sun, May 31 2009, 22:09 GMT
by Korman Tam

Forexnews.com

5/29/2009 3:15 PM: EUR/$..1.4138 $/JPY..95.15 GBP/$..1.6132 $/CHF..1.0671 AUD/$..0.7988 $/CAD..1.0936

Aussie, Euro Surges vs USD

The dollar tumbled sharply against the Aussie, falling past the 0.80-handle for the first time since October. The greenback also struggled versus the euro, slipping to 1.4168 and the sterling, falling just shy of the 1.62-level. Crude oil extended gains, edging up past the $66 per barrel level while US equity bourses were relatively unchanged on the session.

The economic reports released earlier in the session were mixed, with growth and manufacturing reports deteriorating while a key sentiment survey improved by better than estimates. The preliminary Q1 GDP revealed a larger than expected contraction in economic activity, posting a 5.7% decline compared with a 6.1% decline in the previous quarter. The core PCE prices held steady at 1.5%, while corporate profits reversed a steep 10.7% decline in the previous quarter to improve by 1.1%. The New York NAPM index improved in May to 361.6 from April at 356.0. Meanwhile, the Chicago PMI disappointed in May, falling to 34.9 and missing estimates for an improvement to 42.0 from 40.1 in April. The PMI employment component fell to 25.0 from 31.8, while new orders fell to 37.3 from 42.1.

On an upbeat note, the University of Michigan consumer sentiment survey beat forecasts for an improvement to 68.0 in May from 65.1 in April, with the final reading edging up to 68.7. The expectations component jumped to 69.4 versus 63.1 a month earlier, while the conditions index fell to 67.7 from 68.3.

Traders will look ahead to key economic reports due out next week, with US data consisting of PCE, manufacturing ISM, pending home sales, ADP private sector payrolls, durable goods orders, factory orders, and the May labor report. The May unemployment rate is expected to jump to 9.2% from 8.9% in April, while non-farm payrolls are seen shedding another 520k jobs compared with 539k jobs lost a month earlier.
 
Euro Buoyed above 1.41

The euro jumped higher against the dollar, firming toward the 1.4140-level. Data released from the Eurozone overnight saw an improvement in Germany’s April retail sales report, posting a 0.8% decline from a 1.5% decline a year earlier and improved by 0.5% from a 1.0% fall in the previous month.

EURUSD will encounter resistance at 1.4150, followed by 1.42 and 1.4230. Subsequent ceilings are eyed at 1.4265, backed by 1.43 and 1.4340. Support starts at 1.41, followed by 1.4070 and 1.4040. Additional floors are eyed at 1.40, backed by 1.3960 and 1.39.

Published on  Sun, May 31 2009, 22:09 GMT

GBP Breaks above 1.60

Wed, May 27 2009, 22:08 GMT
by Korman Tam

Forexnews.com

5/27/2009 3:18 PM: EUR/$..1.3918 $/JPY..95.20 GBP/$..1.6042 $/CHF..1.0865 AUD/$..0.7810 $/CAD..1.1146

GBP Breaks above 1.60

The greenback was mixed in the Wednesday session, slumping sharply against the sterling to a near 7-month low and edging up versus the yen.

Economic data from the US was better than expected earlier today. Existing home sales shot up by 2.9% in April to 4.68 million units, reversing a downwardly revised 3.4% decline in March. Traders will look ahead to data on Thursday, including weekly jobless claims, April durable goods orders and new home sales.
 
Sterling Rallies

The pound advanced to its highest level since October 2008 against the dollar, above the key 1.60-level to 1.6084 and its strongest level against the euro since February at 0.8655. The sterling, which has been aggressively sold in recent months, garnered the lion’s share of the move to riskier assets overnight. With speculation that US debt may also follow in the footsteps of the UK credit outlook, which was downgraded by the S&P last week from stable to negative, traders continued to bid the sterling higher from oversold territory.

The economic calendar from the UK is light, with the release of the May CBI industrial trends survey. The CBI survey is expected to post a reading of -10 in May compared with a reading of 3 in April.

Cable holds steady near the 1.6060-level with interim resistance seen at 1.6085, followed by 1.61 and 1.6130. Subsequent ceilings are eyed at 1.6160, followed by 1.62 and 1.6250. On the downside, support starts at 1.6025 backed by 1.60 and 1.5970. Additional floors are seen at 1.5940, followed by 1.59 and 1.5850.

Euro Regains Footing

The euro recovered off its session lows against the dollar to edge back above the 1.39-foothold. A barrage of economic reports from the Eurozone are slated for release in the coming session, consisting of Germany’s May unemployment data, Eurozone economic sentiment, consumer sentiment, inflation expectations and business climate.

Germany’s May unemployment rate is expected to creep higher to 8.4%, from 8.3% a month earlier, while the unemployment change is seen jumping to 64k, up from 58k in April. The May Eurozone consumer sentiment is estimated to improve moderately to -30 from -31.0 a month earlier and industrial sentiment is seen edging up to -33 versus -35 in April.

Published on  Wed, May 27 2009, 22:08 GMT

Greenback Slumps on Equity Rally

Tue, May 26 2009, 22:07 GMT
by Korman Tam

Forexnews.com

5/26/2009 2:00 PM: EUR/$..1.3989 $/JPY..94.95 GBP/$..1.5940 $/CHF..1.0836 AUD/$..0.7857 $/CAD..1.1169

Greenback Slumps on Equity Rally

The greenback relinquished gains against the euro and Aussie on the Tuesday session as UK and US markets returned from holiday. The US equity bourses lauded earlier upbeat economic reports, with a sharp unexpected rise in the Conference Board’s May consumer confidence survey to its highest level in 8 months at 54.9, versus a revised 40.8 a month earlier – triggering a sharp rally in the Nasdaq, up 3.45% and the Dow Jones, advancing by over 2.5%. The Richmond Fed manufacturing survey reversed some of its previous month’s declines, as the composite index edged up to 4 in May versus -9 in April, while the manufacturing shipments component improved to 9 from -3 and the services index held steady at -29.

However, not all the reports were positive, with the S&P Case-Shiller home price survey reinforcing current downward pressure on the housing market. The S&P Case-Shiller index in March slumped by 2.2% on a monthly basis and plunged by 18.7% on an annualized basis.
 
Euro Recovers on Shift to Risk

The euro slid overnight against the greenback, tumbling to 1.3860 initially following further dismal economic data from the Eurozone. However, the single currency regained its footing in the New York session on the heels of an equity rally prompted by US data, sending the euro back toward the 1.40-handle.

Germany’s GDP plunged in Q1, marking its steepest drop on record with economic activity posting a 3.8% quarterly decline versus a revised 2.2% contraction in the previous quarter, while tumbling by 6.8% on an annualized basis compared with a 1.7% contraction a year earlier. A breakdown of Germany’s growth figures revealed a decline of 9.7% in exports and a loss of 5.4% in imports, while gross capital investment fell by 7.9% and private consumption increased by 0.5%.

Economic reports from the Eurozone were also disappointing, with industrial orders deteriorating further in March with a 0.8% decline versus a revised 0.0% reading in the previous month. On an annualized basis, industrial orders fell by 26.9%, versus an upwardly revised 34.2% figure a year earlier. The seasonally adjusted March current account deficit improved by more than expected, shrinking to 6.5 billion euros from 7.8 billion euros previously.

EURUSD hovers just beneath the 1.40-level, with support seen at 1.3960, followed by 1.3930 and 1.39. Additional floors will emerge at 1.3860, backed by 1.3820 and 1.38. On the upside, interim resistance starts at 1.40, followed by 1.4020 and 1.4050. Subsequent ceilings are eyed at 1.4080, backed by 1.41 and 1.4140.

Published on  Tue, May 26 2009, 22:07 GMT

JPY Tumbles on N.Korean Nuclear Test

Mon, May 25 2009, 22:06 GMT
by Korman Tam

Forexnews.com

5/25/2009 1:00 PM: EUR/$..1.4010 $/JPY..94.72 GBP/$..1.5906 $/CHF..1.0826 AUD/$..0.7816 $/CAD..1.1248

JPY Tumbles on N.Korean Nuclear Test

The foreign exchange market remained confined within a narrow range at the start of the week amid holiday-thinned trading with the US and UK markets closed. The yen fell sharply overnight as a result of heightened geopolitical risk following reports of North Korea testing nuclear weapons, prompting a slide in the yen to the 95.18-level.

The US market re-opens on Tuesday with the economic calendar consisting of the March Case-Shiller home price index, May Richmond Fed manufacturing and the May Conference Board’s consumer confidence survey. The Case-Shiller home price index is estimated to decline by 1.8% in March, compared with a 2.2% fall in the previous month while falling by 18.5% on an annualized basis versus an 18.6% fall a year earlier. The Conference Board’s consumer confidence survey in May is seen improving slightly to 42.0, up from 39.2 in April.
 
Euro Holds Above 1.40

The euro held firm above the 1.40-level against the greenback despite weaker than expected economic data from Germany. The Ifo business climate component disappointed expectations for an improvement to 85.0, instead improving to 84.2 from 83.7 while the expectations index edged up to 85.9 from 83.9 previously. Ifo President Sinn said the report suggested a “gradual stabilization of the economy at a low level”. With prospects that the rapid deterioration of Germany’s economic fundamentals may be moderating, traders will look ahead to Germany’s Q1 GDP and trade data.

EURUSD will encounter resistance at 1.4050, followed by 1.4080 and 1.41. Subsequent ceilings are eyed at 1.4130, backed by 1.4165 and 1.42. On the downside, support starts at 1.3970, followed by 1.3940 and 1.39. Additional floors will emerge at 1.3860, backed by 1.3820 and 1.38.

Published on  Mon, May 25 2009, 22:06 GMT

USD Tumbles

Wed, May 20 2009, 22:17 GMT
by Korman Tam

Forexnews.com

5/20/2009 3:00 PM: EUR/$..1.3804 $/JPY..94.86 GBP/$..1.5776 $/CHF..1.0992 AUD/$..0.7794 $/CAD..1.1374

USD Tumbles

The greenback came under sharp selling pressure in the New York session, tumbling past the 1.38-level against the euro and relinquishing the 95-figure versus the yen. US equities were up marginally on the session with the Dow Jones up by 0.45% and the Nasdaq edging up by 0.85% in afternoon trading. Crude oil climbed back above the $60 per barrel level

With no economic data released from the US today, traders awaited the minutes from the FOMC’s April meeting. The Fed said further increase in securities purchases may help spur the recovery, but decided to hold the decision on more securities purchases to more closely assess how the economy and financial conditions evolve. The Board also deems the risk for protracted period of deflation to have diminished. The Fed says the economy is still facing significant downside risks, while the data is signaling the economy stabilizing is still tentative. Further, most expect the economy to take 5-6 years to return to long run potential.
 
Japan’s GDP posts Record Decline

USDJPY broke beneath the 95-level to 94.86 amid broadbased dollar weakness. Dismal data released from Japan in the early Asian session revealed a sharp contraction in the economy, with Q1 GDP posting a 4% decline compared with 3.2% decline in the previous quarter and plunging by 15.2% versus a 12.1% contraction a year earlier. The steep annualized contraction in economic activity marked its worst on record and revealed a record 26% plunge in Q1 exports. The capital expenditures component posted a 10.4% quarterly decline, while consumer spending fell by 1.1%.

The Bank of Japan kicks off its two-day monetary policy meeting in the coming session, with the decision expected to be announced on early Friday Asian trading. BoJ Governor Shirakawa said yesterday that, “economic uncertainties remain high”, with the Bank to “concentrate its efforts on propping up the economy”. Although the BoJ is not expected to change interest rates this week, there has been speculation that the Bank is mulling over permitting financial institutions to use US Treasury and foreign debt instruments as collateral for the BoJ’s open-market operations.

Dollar/yen continues to trade beneath the 95-level, with support seen at 94.50, followed by 94.20 and 94. Subsequent floors are eyed at 93.60, backed by 93.30 and 93. On the upside, interim resistance is seen at 95.40, followed by 95.70 and 96. Additional gains will target subsequent ceilings at 96.20, backed by 96.50 and 97.

Published on  Wed, May 20 2009, 22:17 GMT

Equity Gains Push USD Lower

Mon, May 18 2009, 22:12 GMT
by Korman Tam

Forexnews.com

5/18/2009 3:20 PM: EUR/$..1.3528 $/JPY..96.34 GBP/$..1.5320 $/CHF..1.1159 AUD/$..0.7634 $/CAD..1.1644

Equity Gains Push USD Lower

The greenback relinquished some of its overnight gains versus the major currencies, slipping back toward the 1.35-region against the euro on the heels of a stronger start to the week by US equities. The major bourses were all up by over 2%, with the Dow Jones advancing by nearly 2.2% in afternoon trade to 8,445 and the Nasdaq above the 1,700-level with a 2.1% gain.

The May NAHB housing market index was largely inline with expectations, improving to 16 from 14 a month earlier. Economic reports slated for release this week include, for Tuesday, April housing starts and building permits, and on Thursday, weekly jobless claims, April leading indicators, May Philadelphia Fed survey. Housing starts in April are estimated to edge up to 520k units, up from 510k units from March, while building permits are seen improving to 520k units versus 516k units previously.

Traders will continue to focus closely on the equity markets with the greenback and yen moving closely with global capital flows and likely to continue to benefit from any bouts of risk aversion. The dollar had initially gained ground at the start of the Monday session following declines in the Asian equity bourses, but quickly moved lower on positive gains in the US indexes.
 
Euro Climbs Above 1.35

The euro edged higher against the dollar and yen, buoyed by a move back into riskier assets at the start of the week. Following the sharply lower Eurozone growth figures, markets will continue to closely scrutinize incoming data to better assess the prospects for additional policy easing from the ECB. Governing Council member Weber doesn’t expect positive growth rates until mid-2010 but reiterated the current 1% benchmark rate was appropriate.

EURUSD will encounter resistance at 1.3550, followed by 1.3575 and 1.36. Additional gains will target subsequent ceilings at 1.3640, backed by 1.3670 and 1.37. On the downside, support begins at 1.35, followed by 1.3460 and 1.3430. Further losses will encounter additional support at 1.34, backed by 1.3350 and 1.33.

Published on  Mon, May 18 2009, 22:12 GMT

EUR Plunges on Weak Eurozone Growth

Sun, May 17 2009, 22:12 GMT
by Korman Tam

Forexnews.com

5/15/2009 3:09 PM: EUR/$..1.3473 $/JPY..95.04 GBP/$..1.5150 $/CHF..1.1230 AUD/$..0.7483 $/CAD..1.1792

EUR Plunges on Weak Eurozone Growth

The greenback edged higher against the euro on a combination of better than expected US economic reports and continued risk aversion flows. Crude oil slid by over 3.5% to around $56.50 per barrel, while US equities also dipped lower with the Dow Jones and S&P 500 both lower by more than 1%.

The reports released earlier in the session were largely better than expected with the NY Fed manufacturing in May improving to -4.55 from -14.65 in April and industrial production posting a 0.5% decline compared to a 1.5% fall in March. The University of Michigan consumer sentiment survey in May climbed to 67.9, up from 65.1 from April, while the expectations component edged higher to 69.0 from 63.1.
 
Euro Declines on Dismal GDP

The euro plunged sharply against the dollar and the yen in the Friday session, dipping to 1.3463 against the greenback and breaching the 128-level versus the yen. The catalyst for the steep sell-off was data revealing a sharper than expected contraction in the Eurozone economy, with Q1 GDP posting a 2.4% quarterly decline versus 1.9% in Q4 and a 5.9% drop in economic activity, sharply lower than the 2.9% contraction a year earlier. The dismal report revealed the steepest contraction for the Eurozone in 13-years. Germany’s economy, the largest in the Eurozone, posted steep declines in activity as well with Q1 GDP falling by 2.4% from 1.9% in the previous quarter and lower by 6.7% from a year prior with a 1.7% decline.

The unexpectedly soft growth data raises the question of whether additional rate cuts can be expected from the ECB to jumpstart the ailing Eurozone economy. While recent comments from Bank President Trichet have tempered the likelihood for further easing, the latest bout of data may prompt the ECB to reassess the need for aggressive rate cuts.

EURUSD trades near its lowest level in a week beneath the 1.35-handle around 1.3475. Support is seen at 1.3450, followed by 1.3430 and 1.34. Subsequent floors will emerge at 1.3370, backed by 1.3340 and 1.33. On the upside, gains will target interim ceilings at 1.35, followed by 1.3550 and 1.36. Additional resistance is seen at 1.3640, backed by 1.3680 and 1.37.

Published on  Sun, May 17 2009, 22:12 GMT

Dollar Relinquishes Gains, Equities Stabilize

Thu, May 14 2009, 22:41 GMT
by Korman Tam

Forexnews.com

5/14/2009 3:00 PM: EUR/$..1.3644 $/JPY..95.67 GBP/$..1.5224 $/CHF..1.1036 AUD/$..0.7603 $/CAD..1.1698

Dollar Relinquishes Gains, Equities Stabilize

The greenback relinquished some of its previous session’s gains against the majors, easing to 1.3640 versus the euro and 1.5226 against the pound. US equities recovered slightly from yesterday’s dip, with the Nasdaq climbing by nearly 2% and the S&P 500 up by over 1.3%.

Weekly jobless claims edged higher, rising to 637k from the previous week at 601k. Meanwhile, April PPI edged up more than expected to 0.3% reversing a 1.2% decline in the previous month. The April core PPI increased by 0.1% from a flat reading in the previous month while easing to 3.4% versus 3.8% a year earlier.

Traders will look ahead to Friday’s data, which consists of the May NY Fed manufacturing survey, April CPI, April industrial production, March TIC flows and the May University of Michigan consumer confidence survey. The May NY Fed manufacturing survey is forecasted to improve to -12.5 from -14.65 in April. Industrial production in April is estimated to post a 0.7% decline in April versus a 1.5% fall in the previous month. The April headline consumer price index is seen posting a flat reading from a 0.1% decline a month prior, while the annualized figure is estimated to decline by 0.4%. The core readings of CPI are estimated to hold steady, up 0.2% m/m and up 1.8% y/y.

Euro Recovers

The euro climbed back above the 1.36-handle against the dollar, edging up to 1.3664. Eurozone economic reports released overnight revealed further deterioration with the March industrial production posted a 2.0% monthly decline and a 20.2% decline versus the previous year. In the coming session, the calendar includes Germany’s Q1 GDP, Eurozone Q1 GDP and April Eurozone inflation. Germany’s economy is seen declining by 3% on a quarterly basis and by 5% on an annualized basis in the first quarter. The Eurozone is estimated to post a 2.0% q/q decline in GDP, while the annualized growth rate is seen contracting sharply in Q1, down by 4%.

EURUSD holds steady at 1.3650 followed by 1.3670 and 1.37. Additional gains will target 1.3740, backed by 1.3760 and 1.38. On the downside, support begins at 1.3630, followed by 1.36 and 1.3550. Subsequent floors begin at 1.3520, backed by 1.35 and 1.3470.

Published on  Thu, May 14 2009, 22:41 GMT

USD Slips

Tue, May 12 2009, 22:13 GMT
by Korman Tam

Forexnews.com

5/12/2009 3:20 PM: EUR/$..1.3637 $/JPY..96.40 GBP/$..1.5264 $/CHF..1.1056 AUD/$..0.7653 $/CAD..1.1618

USD Slips

The dollar slumped to its lowest level against the euro since late March at 1.3706 and easing toward the 96-level versus the yen. Oil jumped past the $60 per barrel level and gold edged up to $924.10 amid burgeoning hopes for the global economic recession may be moderating.

The trade deficit in March was less than anticipated at $27.58 billion, edging out calls for the deficit to increase to $29.0 billion from $25.97 billion in February. The economic calendar on Wednesday consists of April retail sales, import/export prices and March business inventories. The headline retail sales figure is seen improving by 0.2% in April versus a 1.2% decline in March while the excluding automobiles reading is estimated to edge up by 0.1% compared with a 0.9% fall previously.
 
Euro Edges Higher

The euro was propped higher past the 1.37-level against the dollar following comments from ECB Board member Weber, who stressed there is currently no further need to buy private debt outright as there is no credit crunch in the Eurozone. Weber said that the present level of the main refinance rate is appropriate given current circumstances, while buying covered bonds issued in the Eurozone will help market liquidity, financing for firms and banks. He added that a relatively good exit was still possible from the ECB’s current measures and intends to withdraw liquidity quickly once the economy improves.

Weber also issued a bleak outlook for Germany’s economy, anticipating GDP contracted by more in Q1 than the 2.1% decline in Q4. While there are some positive signs, he doesn’t expect the economy to bottom out quickly and sees a substantial contraction in 2009 GDP on an average annual basis with growth not likely until the second half of 2010.

EURUSD has given back some of its earlier gains, drifting toward the 1.3625. Support is seen at 1.36, followed by 1.3570 and 1.3540. Subsequent floors will emerge at 1.35, backed by 1.3460 and 1.3420. On the upside, gains will emerge at 1.3675, followed by 1.37 and 1.3750. Additional gains will target 1.38 and 1.3850.

Published on  Tue, May 12 2009, 22:13 GMT

Jobs Prompt Shift to Riskier Assets

Sun, May 10 2009, 22:07 GMT
by Korman Tam

Forexnews.com

5/8/2009 3:00 PM: EUR/$..1.3620 $/JPY..98.40 GBP/$..1.5215 $/CHF..1.1064 AUD/$..0.7691 $/CAD..1.1512

Jobs Prompt Shift to Riskier Assets

The dollar whipsawed against the majors in early Friday trading following a key US labor report released for April. Traders initially bid the dollar higher on a better than expected reading in April non-farm payrolls, which improved by more than forecast, posting a loss of 539k jobs compared with calls for a loss of 600k payrolls versus an upwardly revised 699k loss in March. The April unemployment rate was in line with expectations, climbing to a fresh 25-year high at 8.9%, up from 8.5% from March. The better than anticipated payrolls figure prompted a move toward riskier assets as traders pushed the euro to a fresh one-month high against the greenback to the 1.36-level.

US equities climbed higher with the Dow Jones and S&P 500 higher by over 1% on a combination of sentiment that the recession may be moderating and the results from yesterday’s government bank stress tests. Crude oil and spot gold also climbed higher in the Friday session.
 
Euro Flirts with 1.36

Traders continue to bolster the euro, which edged above the 1.36-level versus the dollar and the 134-handle against the yen. Germany’s March industrial production was better than expected with a flat reading versus a 2.9% decline a month prior.

The euro touched the 1.36-level against the dollar amid a shift to riskier assets, its highest level since late March. Support starts at 1.3560, followed by 1.3530 and 1.35. Additional floors will emerge at 1.3470, backed by 1.3440 and 1.34. Gains will target resistance at 1.36, followed by 1.3640 and 1.3670. Subsequent ceilings are eyed at 1.37, backed by 1.3750 and 1.38.

Published on  Sun, May 10 2009, 22:07 GMT

Euro Buoyed by ECB

Thu, May 7 2009, 22:32 GMT
by Korman Tam

Forexnews.com

5/7/2009 2:00 PM: EUR/$..1.3354 $/JPY..98.99 GBP/$..1.4967 $/CHF..1.1312 AUD/$..0.7524 $/CAD..1.1761

Euro Buoyed by ECB

The greenback was mixed on the Thursday session, initially sharply lower against the euro before recovering by afternoon trading. US equities turned negative as the Dow Jones and S&P 500 both slumped by nearly 1.5% and the Nasdaq tumbled by nearly 2.7%. Data released earlier today saw weekly jobless claims ease to 623.5k, down from 637.25k while Q1 preliminary labor costs declined to 3.3% from 5.7% and productivity reverse the previous month’s 0.4% decline to increase by 0.8%.

Traders will focus closely on Friday’s April jobs data with unemployment rate seen jumping to 8.9%, its highest since 1983 and non-farm payrolls posting a loss of 600k jobs versus a loss of 663k jobs previously.

Euro Rallies on ECB Move

The euro bounced off its session lows against the dollar and the yen following ECB President Trichet’s post-decision press conference. The European Central Bank, as expected, cut its benchmark lending rate by 25-basis points to 1.0%. Trichet announced that the Bank would purchase nearly 60 billion euros in covered bonds and provide unlimited funds to banks for up to one year. He stressed that the covered bond purchase would not result in quantitative easing, but “the idea is to revive a market which has been very heavily touched, and all that goes with the survival of the market including spreads, liquidity, and the depth of the market”. Trichet explained that, “these decisions have been taken to promote the ongoing decline in money market term rates, to encourage banks to maintain and expand their lending to clients, to help improve market liquidity in important segments of the private debt security market and to ease funding conditions for banks and enterprises”.

EURUSD advanced toward its 200-day moving average near the 1.3470-level before relinquishing some of its strength. The pair hovers just beneath the 1.34-level with support seen at 1.3370 followed by 1.3340 and 1.33. Subsequent floors will emerge at 1.3260, backed by 1.3230 and 1.32. Gains will target interim ceilings at 1.34, followed by 1.3440 and 1.3470. Additional resistance is eyed at 1.35 and 1.3550.

Published on  Thu, May 7 2009, 22:32 GMT

USD Edges Higher on Bernanke & Data

Tue, May 5 2009, 22:15 GMT
by Korman Tam

Forexnews.com

5/5/2009 2:00 PM: EUR/$..1.3342 $/JPY..98.97 GBP/$..1.5096 $/CHF..1.1311 AUD/$..0.7426 $/CAD..1.1746

USD Edges Higher on Bernanke & Data

The dollar recovered some of its earlier losses against the majors, pushing the euro toward the 1.3325-level and edging up to 99.20 versus the yen. A combination of upbeat sentiment from Fed Chairman Bernanke’s Congressional testimony and better than expected US data helped prop the greenback higher. The April non-manufacturing ISM beat consensus estimates for an increase to 42.0 from 40.8 in March, instead climbing to 45.2, albeit still beneath the key 50-level that separates expansion from contraction.

Fed Chairman Bernanke, testifying before the Joint Economic Committee, acknowledged improving conditions in the financial markets in recent months. He said the Fed was “not trying to target a particular interest rate”, with the FOMC’s objective to “provide more liquidity to the system and to help private credit markets”. Bernanke continues to “expect economic activity to bottom out, then turn up later this year”, adding that key elements in this forecast incorporate the Fed’s “assessments that the housing market is beginning to stabilize and that the sharp inventory liquidation that has been in progress will slow over the next few quarters”. His comments reiterated recent market sentiment that the US economic recession has moderated somewhat and beginning to bottom out.

The economic calendar for Wednesday is light, consisting of the April ADP private-sector payrolls figure. Traders will pay close attention, particularly ahead of Friday’s key jobs report. Consensus estimates look for a loss of 700k jobs in April, compared with 745k jobs lost in March. The April unemployment rate, due out on Friday at 8:30 AM is seen creeping up further to 8.8% from 8.5%, its highest rate since October 1983. Non-farm payrolls are expected to reveal another 631k jobs lost in April versus 663k a month earlier.
 
Euro Eases

The euro eased off its highs toward the 1.3320-level against the greenback amid lingering uncertainty over how aggressive the ECB will be in slashing interest rates to jumpstart the ailing Eurozone economy. The Bank will mull over policy on Thursday and announce the results at 7:45 AM. Markets are looking for the ECB to cut rates by 25-basis points to 1%. The key highlight will be the subsequent policy statement from Bank President Trichet, particularly given the recent dissenting comments from Governing Board members.

EURUSD holds steady around 1.3340, with support seen at 1.33 backed by 1.3260 and 1.3220. Subsequent floors will emerge at 1.32, backed by 1.3170 and 1.3130. On the topside, resistance will emerge at 1.3365, backed by 1.34 and 1.3440. Additional gains will target 1.3470, followed by 1.35 and 1.3550.

Published on  Tue, May 5 2009, 22:15 GMT

USD Mixed

Thu, Apr 30 2009, 22:17 GMT
by Korman Tam

Forexnews.com

4/30/2009 3:24 PM: EUR/$..1.3232 $/JPY..98.59 GBP/$..1.4784 $/CHF..1.1404 AUD/$..0.7260 $/CAD..1.1954

USD Mixed

The greenback was in the Thursday session, higher against the yen while slumping against the Australian dollar. Yesterday’s FOMC policy statement propped up the dollar on improved sentiment over the economic outlook. The Fed expressed optimism that the US economic recession may be moderating. The calendar today saw better than expected US reports, with weekly jobless claims declining to 631k versus an upwardly revised 645k a month earlier and Chicago PMI jumping to 40.1 in April, up from 31.4 in March.

US data slated for release on Friday consists of April University of Michigan consumer confidence, March factory orders and April ISM manufacturing. The final reading for the University of Michigan consumer sentiment in April is estimated to stand pat at 61.9. Factory orders are expected to post a 0.6% decline versus a 1.8% increase a month earlier. Lastly, the April manufacturing ISM is seen improving to 38.4 from 36.3 in March while the prices paid component is expected to edge up to 34.0 from 31.0.
 
Euro Drifts Lower on Data

The euro reached a new two-week high against the greenback in early London trading at 1.3384 but quickly relinquished its strength follower weaker than anticipated labor reports.

Economic data from the Eurozone were largely worst than expected reinforcing sentiment that the region’s fundamentals continue to deteriorate. Eurozone unemployment rate in March shot up to its highest level since November 2005 at 8.9% compared with an upwardly revised 8.7% reading in the previous month. However, inflation figures improved as the annualized consumer price index held steady at 0.6% in April. Germany’s unemployment rate edged up in April to 8.3%, its highest level since December 2007 and up from 8.1% in March. Unemployment change fell to 58k compared with an upwardly revised 71k a month earlier.

EURUSD holds steady around 1.3250, with support starting at 1.32, followed by 1.3160. Additional support is seen at 1.3130, backed by 1.31 and 1.3050. On the upside, gains will target 1.3270, followed by 1.33 and 1.3340. Subsequent gains will emerge at 1.3365, followed by 1.34 and 1.3450.

Published on  Thu, Apr 30 2009, 22:17 GMT

USD Drifts Lower Ahead of FOMC

Tue, Apr 28 2009, 22:40 GMT
by Korman Tam

Forexnews.com

4/28/2009 3:20 PM: EUR/$..1.3146 $/JPY..96.39 GBP/$..1.4620 $/CHF..1.1434 AUD/$..0.7074 $/CAD..1.2192

USD Drifts Lower Ahead of FOMC

The dollar gave back some of its recent gains against the euro, falling to 1.3166 while dropping to 95.61 versus the yen. The FOMC kicked off its two-day monetary policy meeting earlier and will be announcing the results Wednesday afternoon. With the Fed’s benchmark lending rate already at zero, there is likely to be no change in interest rates. The key focus will be whether the FOMC will continue to ease policy through alternative measures. The policy statement will also be closely scrutinized.

US equities clawed back into positive territory following a surprise reading in the Conference Board’s survey of consumer confidence, which sharply beat expectations in April at 39.2 from a revised reading of 26.9 a month earlier. The bounce in consumer confidence marked its strongest reading since November 2008. The February Case-Shiller home price index declined by 2.2% on a monthly basis versus a 2.8% drop in the previous month, while declining by 18.63% compared with a revised 19% drop a year earlier. Also released was the April Richmond Fed manufacturing index posted a -9.0 reading compared with -20 in the previous month.

The economic calendar for Wednesday will see Q1 GDP and PCE. On an annualized basis, the economy is estimated to contract by 5.0%, versus 6.3% previously. The personal consumption index is estimated to increase by 0.9% in the first quarter compared with a 4.3% decline, while the core PCE is estimated to increase by 1.5%versus 0.9%.
 
JPY Edges Higher

The yen advanced against the greenback, pushing up to 95.61 in the New York session. A barrage of Japanese data is due out in early Wednesday trading, consisting of March industrial production, housing starts and construction. The Bank of Japan will also announce the results of its policy deliberations. The BoJ is not expected to make any changes.

USDJPY hovers near 96.40, with support starting at 96, backed by 95.70 and 95.30. Subsequent floors are eyed at 95, followed by 94.60 and 94.20. On the upside, gains will emerge at 96.50, backed by 96.75 and 97.

Published on  Tue, Apr 28 2009, 22:40 GMT

USD, JPY Rally on Swine Flu Fears

Mon, Apr 27 2009, 22:22 GMT
by Korman Tam

Forexnews.com

4/27/2009 2:45 PM: EUR/$..1.3018 $/JPY..96.70 GBP/$..1.4630 $/CHF..1.1564 AUD/$..0.7109 $/CAD..1.2207

USD, JPY Rally on Swine Flu Fears

The foreign exchange market reacted to the swine flu pandemic at the start of the week with traders bidding higher the safe-haven currencies. The dollar and yen advanced across the board amid declining global equities, pushing the euro lower to 1.3001 and 125.68, respectively.

The US economic calendar for the coming week will see a barrage of reports including the Case-Shiller home price survey, Richmond Fed survey, Conference Board’s consumer confidence survey, Q1 GDP, personal income, consumption, PCE, Chicago PMI, University of Michigan consumer sentiment, durable goods orders, and ISM manufacturing. Consensus estimates call for Q1 GDP to post a decline of 5.0% versus the previous decline of 6.3%. Meanwhile, consumer confidence is estimated to improve in April to 29.5, versus 26.0 a month earlier.
 
Euro Slumps

The euro traded lower amid heightened risk aversion as a result of fears over the global economic impact of the swine flu epidemic. However, the key catalyst for euro selling occurred during the New York session, following dovish comments from ECB governing council member Nowotny. He reiterated that Eurozone interest rates will stay low for a long time and that the Bank remains ready to use quantitative easing if necessary. Nowotny said that the ECB would take the necessary measures to stabilize inflation expectations.

Nowotny’s comments add to the uncertain outlook over the likelihood for further rate cuts with several officials having already suggested a bottom in ECB interest rates. Meanwhile, ECB President Trichet tempered Nowotny’s comments by saying the Bank needs to balance the need for quick action with the key obligation to resume sustainable path in the medium-term. Trichet dismissed the argument of lowering policy rates as the most effective response in a downturn as simplistic and suggested that overly activist policies not only risks destabilizing expectations, but is also counterproductive.

The euro retreated sharply from 1.3272 to 1.3001, with further losses to emerge at 1.2975, followed by 1.2940 and 1.29. Subsequent floors will emerge at 1.2880, backed by 1.2840 and 1.28. On the upside, gains will target interim resistance at 1.3050, backed by 1.31 and 1.3140. Additional ceilings are seen at 1.3170, followed by 1.32 and 1.3240.

Published on  Mon, Apr 27 2009, 22:22 GMT

USD Dragged Lower

Sun, Apr 26 2009, 22:22 GMT
by Korman Tam

Forexnews.com

4/24/2009 1:30 PM: EUR/$..1.3269 $/JPY..97.01 GBP/$..1.4687 $/CHF..1.1372 AUD/$..0.7217 $/CAD..1.2090

USD Dragged Lower

The dollar extended losses against the majors, declining just shy of the 1.33-level against the euro and a 3 ½ week low versus the yen at 96.66. The economic reports released from the US this morning were mixed, consisting of March durable goods, factory orders and new home sales. Durable goods orders for March were better than expected, improving to -0.8% and beating calls for deterioration to -1.4% from 3.5% a month earlier. Meanwhile, March new home sales posted a 0.6% decline from the previous month at 356k units compared with an upwardly revised 358k units from February.

US equities were trading higher by mid-day Friday trading, with the Dow Jones and S&P 500 both up by over 1.5% and the Nasdaq rallying by over 2%. Corporate earnings this week from technology firms such as Apple and Amazon have beat out consensus estimates, extending the Nasdaq’s rally from early March – which has seen advanced by almost 34% from its March 9th trough. Traders are looking ahead to the release of the government’s bank stress tests, due out at 2pm. A combination of Friday profit taking and dour sentiment over financials could drag stocks lower near the close.
 
Euro Bounces Higher

The euro rallied sharply at the end of the week, climbing toward the 1.33-level against the greenback and edging up to above the 129-handle versus the yen. Germany’s economic sentiment unexpectedly beat out consensus estimates, with the April IFO index climbing to 83.7, versus 82.4 a month earlier. The expectations component jumped to 83.9, improving from the previous month at 81.6, while the current conditions index edged up to 83.6 from 82.7.

EURUSD continues to hold onto its gains near 1.3275, with interim resistance eyed at 1.33, followed by 1.3340 and 1.3380. Additional gains will target 1.34, followed by 1.3430 and 1.3460. On the downside, support starts at 1.3240, followed by 1.32 and 1.3365. Subsequent floors will emerge at 1.3320, followed by 1.33 and 1.3270.

Published on  Sun, Apr 26 2009, 22:22 GMT

USD Edges Higher on Data

Wed, Apr 15 2009, 22:16 GMT
by Korman Tam

Forexnews.com

4/15/2009 3:53 PM: EUR/$..1.3218 $/JPY..99.32 GBP/$..1.4983 $/CHF..1.1434 AUD/$..0.7269 $/CAD..1.2031

USD Edges Higher on Data

The dollar was slightly firmer against the majors in the Wednesday session, pushing the euro off its session highs just shy of the 1.33-level toward the 1.32-handle and recovering above the 1.50-level versus the sterling. US equities were largely flat on the day with traders eyeing key earnings reports scheduled for the remainder of the week including JP Morgan, Citigroup and GE. The major driver of FX market moves continues to be global equity direction, with safe haven flows benefiting the dollar and yen.

Economic data released earlier from the US included March CPI, NY Fed manufacturing, industrial output, capacity utilization, net capital flows and the NAHB housing market index. The March CPI declined by 0.1% versus an increase of 0.4% in the previous month, while the annualized CPI figure fell by 0.4% compared with +0.2% a year earlier. The core CPI figures increased by 0.2% on a monthly basis while the remaining unchanged at 1.8% on a yearly basis. The NY Fed manufacturing survey for April improved to -14.65 from a month earlier at -38.23. Industrial output was unchanged in March, falling by 1.5%, while capacity utilization eased to 69.3% from 70.2%. Lastly, the NAHB housing market index unexpectedly improved to 14 in April, beating expectations for an increase to 10 from 9 in March.

The calendar for Thursday consists of weekly jobless claims, March housing starts, housing permits and Philadelphia Fed survey. Weekly jobless are seen creeping up to 655k from 654k. Housing starts in March are expected to decline to 550k units, down from 583k units, while housing permits are seen easing to 550k from 564k a month earlier. Lastly, the April Philadelphia Fed business survey is estimated to improve to minus 32 from minus 35 in March.

EURUSD hovers just above the 1.32-level with support starting at 1.3180 backed by 1.3130 and 1.31. Additional support will emerge 1.3050, backed by 1.3020 and 1.30. Meanwhile, gains will target resistance at 1.3225, followed by 1.3260 and 1.33. Subsequent ceilings are seen at 1.3340, followed by 1.3370 and 1.34.

Published on  Wed, Apr 15 2009, 22:16 GMT

Risk Aversion Props USD, JPY

Tue, Apr 7 2009, 22:23 GMT
by Korman Tam

Forexnews.com

4/7/2009 3:51 PM: EUR/$..1.3270 $/JPY..100.42 GBP/$..1.4736 $/CHF..1.1425 AUD/$..0.7124 $/CAD..1.2356

Risk Aversion Props USD, JPY

The safe haven currencies continue to benefit from further declines in the US stock market, with the dollar and the yen edging higher across the board. The equity market will likely continue to dictate direction as traders closely scrutinize corporate earnings reports in the coming weeks to gauge the impact of the recession on US corporations. The major equity bourses further relinquished recent gains, as the Dow Jones and Nasdaq were both lower by over 2% while the S&P 500 slumped by 1.9% in the afternoon session.
 
RBA Cuts Benchmark Lending Rate

The Aussie remained within range against the greenback following a 25-basis point rate cut by the Reserve Bank of Australia to its lowest level in nearly half a century to 3.0%. In the accompanying statement however, the Bank provided few details as to whether additional policy easing can be expected over the coming months. The RBA continued to acknowledge that Australia’s economy is contracting, with capacity utilization falling from its peak, demand for labor declining and expectations for growth in labor costs seen further easing. Lastly, the Bank tempered the outlook for additional rate cuts, stating the current “stance of monetary policy will provide significant support to domestic demand over the period ahead”.

AUDUSD continues to shy away from its 3-month highs reached last Friday at 0.7228, hovering near the 0.7150-region in New York trading. Interim resistance is seen at 0.72, followed by 0.7230 and 0.7267 – the pair’s January high. Subsequent ceilings will emerge at 0.73, backed by 0.7350 and 0.7410 – the 200-day moving average. On the downside, support starts 0.7120 followed by 0.71 and 0.7045. Additional floors will emerge at 0.70, backed by 0.6965 and 0.6920.

Euro Retreats

The euro extended losses, dipping beneath the 1.33-level against the dollar to 1.3226. Data released overnight revealed worst than expected Eurozone Q4 GDP, with the revised quarterly growth rate posting a 1.6% contraction compared with a 0.2% contraction previously while the annualized growth rate declined by 1.5%, reversing a prior reading of an increase of 0.6%.

In the coming session, the calendar consists of Germany’s February trade balance and industrial orders.

EURUSD holds steady near 1.3270 with support starting at .13250, followed by 1.3220 and 1.32. Subsequent floors are eyed at 1.3160, followed by 1.3130 and 1.31. Gains will target resistance at 1.33, followed by 1.3340 and 1.3375. Additional resistance will emerge at 1.34, backed by 1.3430 and 1.3465.

Published on  Tue, Apr 7 2009, 22:23 GMT

USD & JPY Rebound

Mon, Apr 6 2009, 22:07 GMT
by Korman Tam

Forexnews.com

4/6/2009 3:28 PM: EUR/$..1.3398 $/JPY..101.00 GBP/$..1.4724 $/CHF..1.1372 AUD/$..0.7114 $/CAD..1.2409

USD & JPY Rebound

The dollar and yen recouped sharp overnight selling against the majors in the New York session amid declines in the US equity market. The greenback recovered from a two-month low versus the sterling at 1.4956 toward the 1.4720-level, while pushing the euro off its highs near 1.3582 to beneath the 1.34-handle. By afternoon trading, the Dow Jones is lower by 1.4% and the S&P 500 and Nasdaq both down by over 1.7%.

The Fed announced currency swaps with the Bank of England, European Central Bank, Bank of Japan and the Swiss National Bank, thus providing additional liquidity to the global financial markets. The Fed said, “should the need arise, euro, yen, sterling and Swiss francs would be provided to the Federal Reserve via these additional swap arrangements with the relevant central banks”. It also added that “central banks continue to work together and are taking steps as appropriate to foster stability in global financial markets”.

With last week’s dismal jobs data out of the way, the economic reports slated for release in this holiday-shortened week are light, consisting of February wholesale inventories, February trade deficit and weekly jobless claims.
 
Sterling Relinquishes Gains

The pound briefly climbed to its highest level in two months against the dollar at 1.4956 before retreating toward the 1.4720-region. UK data due out in the session ahead consist of February manufacturing production and industrial production. Manufacturing production is seen declining by 1.5% compared with a 2.9% decline a month earlier, while the annualized figure is estimated to deteriorate further, falling by 14.2% versus 12.8% a year earlier. Meanwhile, industrial production is forecasted to decline by 1.2% from a 2.6% fall in the previous month and worsen by 12.5% from an 11.4% fall a year earlier.

The Bank of England will announce the results of its monetary policy meeting on Thursday at 7:00 AM. Although the BoE is seen holding rates unchanged at 0.5%, with unemployment remains at its worst levels in nearly 12-years and economic activity posting its largest contraction since World War II, the Bank will likely reiterate its accommodative stance to stimulate growth. The BoE also anticipates inflationary pressure to ease over the coming year, thereby enabling the Bank to further reduce rates toward zero.

Cable holds steady around 1.4720, with support seen at 1.47 backed by 1.4660 and 1.4630. Subsequent floors will emerge at 1.46, backed by 1.4550 and 1.45. On the upside, gains will target interim ceilings at 1.4750 followed by 1.4775 and 1.48. Additional ceilings are eyed at 1.4830, backed by 1.4865 and 1.49.

Published on  Mon, Apr 6 2009, 22:07 GMT

Risk Aversion benefits USD & JPY

Tue, Mar 31 2009, 22:32 GMT
by Korman Tam

Forexnews.com

3/30/2009 11:00 PM: EUR/$..1.3236 $/JPY..98.08 GBP/$..1.4292 $/CHF..1.1466 AUD/$..0.6864 $/CAD..1.2577

Risk Aversion benefits USD & JPY

The dollar and the yen advanced at the start of the week amid increased risk aversion from a bailout proposal of the US auto industry. The equity bourses tumbled, with the Dow Jones and S&P 500 both plunging by over 3%, while the Nasdaq dipped by 2.8%.

Euro Recovers above 1.32

The euro edged back above the 1.32-level in the early Asian session, rebounding from Monday’s lows against the dollar to above the 1.3250-level. Traders will focus on the ECB monetary policy decision later in the week. Markets are expecting the European Central Bank to cut rates aggressively, slashing the benchmark interest rate by 50-basis points to 1%. The subsequent press conference by Bank President Trichet will also be closely scrutinized for hints of whether additional policy easing can be anticipated over the coming quarters.

EURUSD holds steady above the 1.3230-level, with interim resistance eyed at 1.3250, followed by 1.3270 and 1.33. Subsequent ceilings are seen at 1.3340, backed by 1.3365 and 1.34. On the downside, support begins at 1.32, followed by 1.3160 and 1.3130. Additional floors will emerge at 1.31, backed 1.3050 and 1.30.

Japan Unemployment at 3-year high

Japan’s February unemployment rate climbed up to its highest level December 2005 at 4.4%, slightly higher than consensus estimates for an increase to 4.3% from 4.1% in January. The jobs-to-applicants ratio deteriorated by more than expected, falling to 0.59 in February from 0.67 in the previous month. Japan’s all-household spending declined less than the previous month, falling by 3.5% in February versus a 5.9% decline in January. Meanwhile, manufacturing PMI in March climbed to 33.8, improving from 31.6 a month earlier.

The yen edged up against the majors in the Monday session, benefiting from sharp declines in the US equity bourses. USDJPY hovers above the 98-level with interim resistance seen at 98.30, followed by 98.65 and 99. Subsequent ceilings are eyed 99.40, backed by 99.70 and 100. On the downside, support begins at 97.80, followed by 97.30 and 97. Additional floors will emerge at 96.60, backed by 96.30 and 96.

Published on  Tue, Mar 31 2009, 22:32 GMT

JPY Slumps

Sun, Mar 29 2009, 22:13 GMT
by Korman Tam

Forexnews.com

3/26/2009 10:45 PM: EUR/$..1.3564 $/JPY..98.42 GBP/$..1.4472 $/CHF..1.1249 AUD/$..0.7002 $/CAD..1.2278

JPY Slumps

The greenback was little changed in the Thursday session, edging slightly higher against the euro toward the 1.35-level while advancing versus the sterling. The yen was the loser on the session amid sharp gains in the US equity bourses, losing ground across the board. The Dow Jones added onto recent sessions’ gains, up 2.25% while the Nasdaq surged by 3.8%.

The US economy contracted by less than expected in Q4, albeit worse than the initial reading. The report revealed Q4 GDP contracted by 6.3%, slightly better than consensus estimates for a 6.5% decline versus the previous estimate of a 6.2% decline. The core PCE in Q4 was slightly higher at 0.9% compared with 0.8% previously, while headline PCE posted a 4.9% decline versus a 5.0% decline in the initial estimate. Meanwhile, the outlook for the US jobs market remains bleak with weekly jobless claims creeping up further to 652k from 646k a week earlier.

Reports slated for release in the Friday session include February consumption, personal income, PCE and the University of Michigan. Markets expect February consumption to decline to 0.2% from 0.6% in January while personal income is seen declining by 0.1% compared with an increase of 0.4% previously. The University of Michigan consumer sentiment survey final reading is expected to improve to 56.8 in February, up from 56.3 while the current survey is seen declining to 64.1 from 65.5 in January.
 
GBP steady ahead GDP

Cable trades around the 1.4460-level ahead of key UK data to be released in the early Friday session. Traders will look ahead to the March nationwide house prices, Q4 current account balance and Q4 GDP. Consensus estimates for Q4 GDP are largely unchanged from the previous reading, with quarterly growth seen contracting by 1.5% while the annualized growth figure is expected to decline by 1.9%.

GBPUSD will encounter support at 1.4430, backed by 1.44 and 1.4360. Subsequent floors will emerge at 1.4340, followed by 1.43 and 1.4250. On the upside, gains will target 1.45, followed by 1.4540 and 1.4580. Additional ceilings will emerge at 1.46, backed by 1.4640 and 1.4670.

Published on  Sun, Mar 29 2009, 22:13 GMT

USD Slumps as Stocks Surge

Tue, Mar 24 2009, 22:27 GMT
by Korman Tam

Forexnews.com

3/23/2009 10:30 PM: EUR/$..1.3662 $/JPY..97.83 GBP/$..1.4680 $/CHF..1.1230 AUD/$..0.7074 $/CAD..1.2207

USD Slumps as Stocks Surge

The greenback and yen traded lower across the board at the start of the week on the heels of a sharp surge in the US equity bourses. The catalyst for the steep gains was the Treasury’s plan to purchase nearly $1 trillion in bad assets from banks – with private investors expected to provide the predominant source of the purchases and thereby avoiding nationalization. The S&P 500 surged by over 7%, while the Dow Jones and Nasdaq were both up approximately 6.8% on the Monday session.

Economic reports released from the US revealed an unexpected jump in existing home sales for February, up by 5.1% to 4.72 mln units from 4.49 mln units a month earlier – defying calls for a decline of 5.3%. In the session ahead, the calendar consists of the January Richmond Fed survey and home prices.

The foreign exchange market will continue to take its cues from the equity markets with a shift to riskier assets remaining detrimental for the dollar and the yen. We expect the euro to further extend gains over the coming sessions against the greenback with our initial target around the 1.39-region.
 
Yen Slumps

The yen fell to its lowest level against the euro in 4 ½ months just shy of the 134-level and drifted lower versus the dollar near 98. The minutes from the Bank of Japan’s revealed members mulling over extending special corporate funding steps ahead of the fiscal year-end. The Bank members agreed it should encourage a decline in term rates through special funding operations. However, Board member Suda said that outright buying of corporate bonds was not necessary and would only have a limited impact.

Meanwhile, Japan’s Finance Minister Yosano said it was important to use forex reserves for currency market stability, hinting at the possible use of intervention. He also added that there is currently no need to loan FX reserves to other Japanese institutions.

Published on  Tue, Mar 24 2009, 22:27 GMT

Fed Move Slams USD

Wed, Mar 18 2009, 22:25 GMT
by Korman Tam

Forexnews.com

3/18/2009 2:59 PM: EUR/$..1.3414 $/JPY..96.32 GBP/$..1.4213 $/CHF..1.1442 AUD/$..0.6759 $/CAD..1.2499

Fed Move Slams USD

The dollar collapsed following the FOMC monetary policy decision in the Wednesday afternoon session. Although the Fed left its benchmark interest rate unchanged at 0%-0.25%, it announced additional measures to prop up the economy and loosen credit to the markets. The statement announced, “To provide greater support to mortgage lending and housing markets, the Committee decided to increase the size of the Fed’s Balance sheet further by purchasing up to an additional $750 billion of agency MBS, totaling $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion”. The Fed also announced the purchase of up to $300 billion of longer-term Treasuries in the next six months.

The surprise move by the Fed was lauded by the US equity markets, sending the Dow Jones higher by over 1.5% and the S&P 500 sharply up by over 2.4%. However, the greenback sold off heavily – tumbling to a fresh two-month low against the euro at 1.3436.

GBP Recovers from Jobs

The pound was initially lower versus the dollar and euro, slipping to 1.3847 and 0.9414, respectively. Dragging the sterling sharply lower was a dismal report on the UK jobs data. The January ILO unemployment rate edged up in line with expectations to 6.5%, versus 6.3% in the previous month. The February claimant count spiked up by 138.4k, bringing jobless claims to 1.39 million – which marked its highest level in 38-years.

Cable continues to teeter just beneath the 1.40-level, with interim support starting at 1.3930, followed by 1.39 and 1.3870. Additional floors will emerge at 1.3860, backed by 1.3840 and 1.38. On the topside, resistance is seen at 1.40, followed by 1.4040 and 1.4070. Subsequent ceilings are eyed at 1.41, followed by 1.4150 and 1.42.

Published on  Wed, Mar 18 2009, 22:25 GMT

USD Mixed Ahead of Central Bank Decisions

Tue, Mar 17 2009, 22:44 GMT
by Korman Tam

Forexnews.com

3/17/2009 3:30 PM: EUR/$..1.3004 $/JPY..98.57 GBP/$..1.4036 $/CHF..1.1824 AUD/$..0.6606 $/CAD..1.2700

USD Mixed Ahead of Central Bank Decisions

The dollar was mixed in the Tuesday session, losing ground against the euro and the Loonie despite better than expected US economic reports. The February housing starts figure unexpectedly jumped to 583k units, up by 22.2% from a month earlier at 466k units. Building permits also beat consensus estimates, improving to 547k units defying calls for a decline to 500k units from 531k units in the previous month. Producer prices for February were mixed with the headline prices at 0.1%, down from the previous month at 0.8% while declining by 1.3% on an annualized basis versus a 1.0% drop previously.

The key highlight for Wednesday will be the FOMC monetary policy decision, due out around 2:15 pm. While the Fed’s room for maneuver is limited at this point, the accompanying policy statement will likely reiterate the FOMC’s support for providing the necessary means to prop up the economy. Additional reports due out tomorrow include February CPI and the current account balance.
 
Euro edges Higher

The euro crept higher against the majors, holding onto its gains versus the greenback, yen and sterling. Economic data from the Eurozone saw Germany’s March ZEW sentiment survey deteriorate by less than anticipated, with the current conditions component worsening by less than expected to -89.4 from -86.2 in February. The March ZEW economic sentiment unexpectedly improved to -3.5, beating calls for further decline to -7.4 from -5.8.

EURUSD continues to hold steady just above the 1.30-level and will encounter interim resistance at 1.3030, followed by 1.3060 and 1.31. Additional ceilings will emerge at 1.3140, backed by 1.3170 and 1.32. On the downside, support begins at 1.2980, followed by 1.2930 and 1.29. Subsequent floors will emerge at 1.2870, backed by 1.2840 and 1.28.

Yen Drifts Lower ahead of BoJ

The yen continued to slip lower against the euro and dollar ahead of the Bank of Japan monetary policy decision due out in the early Wednesday session. The BoJ is limited in terms of interest rate mobility but there has been speculation that the Bank may initiate a program to provide struggling banks with subordinated loans. BoJ Governor Shirakawa described the possible move as an “extraordinary measure” and will likely be implemented as soon as possible.

Published on  Tue, Mar 17 2009, 22:44 GMT

EUR & GBP Rally

Mon, Mar 16 2009, 22:33 GMT
by Korman Tam

Forexnews.com

3/16/2009 3:10 PM: EUR/$..1.2987 $/JPY..98.22 GBP/$..1.4081 $/CHF..1.1845 AUD/$..0.6606 $/CAD..1.2688

EUR & GBP Rally

The euro and the sterling rallied sharply against the dollar at the start of the week as a shift away from risk aversion proved detrimental to the greenback. The euro jumped to its highest level in over a month versus the dollar above the psychologically key 1.30-level while the pound edged up above the 1.42-handle to 1.4228. US equities were higher by afternoon trading with the Dow Jones adding onto last week’s gains, edging up by 1.8% to 7,355 and the S&P 500 advancing by 1.7% to 770.13.

The communiqué from this past weekend’s G-20 Finance Ministers meeting provided reassurance to markets that the participating governments and central banks would “continue vigorous efforts and take whatever further actions are necessary to stabilize the financial system”. The statement acknowledged “the importance of monetary policy support…and use of fiscal measures to stimulate domestic demand to rapid effect”. Although the statement provided solidarity in delivery the necessary stimulus needed to restore global growth, it was short on specifics.

Fed Chairman Bernanke reiterated his sentiment that the recession could end as early as this year if financial markets are stabilized. Bernanke deems the biggest risk to be lack of “political will” in resolving the financial crisis but expressed confidence that we’re currently beyond that now.

US economic reports released earlier in the session saw industrial production post a 1.4% decline in February versus a 1.8% drop in January. Meanwhile, capacity utilization declined to 70.9% from 72% a month earlier. The NAHB housing survey in March held steady at 9. The January overall net capital flows posted a net outflow of $148.9 bln compared with inflows of $74.0 in the previous month.

Traders will look ahead to housing reports and PPI in the session ahead. Markets are expecting housing permits in February to decline to 510k, down from 531k while housing starts are expected to fall to 450k versus 466k a month earlier.

EURUSD will find support at 1.2960, followed by 1.2930 and 1.29. Additional floors will emerge at 1.2850, backed by 1.2820 and 1.28. Gains will encounter ceilings at 1.3030, backed by 1.3065 and 1.31

Published on  Mon, Mar 16 2009, 22:33 GMT

CHF Plunges on Intervention

Thu, Mar 12 2009, 22:24 GMT
by Korman Tam

Forexnews.com

3/12/2009 3:40 PM: EUR/$..1.2901 $/JPY..97.78 GBP/$..1.3936 $/CHF..1.1851 AUD/$..0.6526 $/CAD..1.2792

CHF Plunges on Intervention

The dollar was mixed in the Thursday session, rallying against the Swissie to a 3-month high while slumping versus the euro. US equities maintained a buoyant tone with the Dow Jones edging higher by over 2.5% to recover above the key 7000-level, while the S&P 500 was up by nearly 3% to 743.

Economic reports released earlier saw weekly jobless claims jump to 654k versus 639k from a week earlier. Retail sales in February were better than expected with the headline figure posting a 0.1% decline versus a 1.0% increase in January and the excluding autos reading increasing by 0.7%, down slightly from 0.9% from January. The data slated for release on Friday include January trade deficit, expected to improve $38 billion from a month earlier at $39.93 billion. The University of Michigan consumer sentiment survey in March is seen drifting to 55.0, down from 56.3 while the expectations component is expected to decline to 49.0 versus 50.5 from February.

SNB Announces Intervention

The Swiss franc sold off sharply against the greenback, hitting its lowest level since December just shy of the 1.20-handle in a knee-jerk reaction to the SNB’s policy announcement earlier in the session. The Swiss National Bank cut its three-month LIBOR target to 0.25%, its lowest on record. The catalyst for the plunge in the Swissie was the subsequent announcement from Bank spokesman Abegg stating the SNB will be implementing intervention in the foreign exchange market -- prompting the Swiss franc’s largest one-day decline against the euro on record.

USDCHF has eased off its 3-month high at 1.1968 to trade beneath the 1.19-level. Support starts at 1.1830, followed by 1.1800 and 1.1750. Subsequent floors are seen at 1.1660, followed by 1.16 and 1.1570. On the topside, resistance begins at 1.19, followed by 1.1930 and 1.1970. Additional gains will target 1.20, backed by 1.2040 and 1.2080.

Published on  Thu, Mar 12 2009, 22:24 GMT

USD Recoups Amid Sharp Stock Advance

Tue, Mar 10 2009, 22:35 GMT
by Korman Tam

Forexnews.com

3/10/2009 3:45 PM: EUR/$..1.2654 $/JPY..98.68 GBP/$..1.3733 $/CHF..1.1630 AUD/$..0.6425 $/CAD..1.2858

USD Recoups Amid Sharp Stock Advance

The greenback has recovered from some of its earlier sharp losses against the euro, which slumped past the 1.28-level to 1.2822. The primary driver in the foreign exchange market on the Tuesday session was the strong rally in US equity bourses, with the Dow Jones surging by over 4.5%, the Nasdaq advancing by over 6.0% and the S&P 500 gaining by over 5%.

US equities regained their footing after heavy selling in recent sessions on the heels of an internal memo from Citigroup CEO Pandit, describing the current quarter as its best since 2007. Pandit said he was encouraged by the strength of Citigroup’s business in the current year and was profitable for the first two months of the year, adding it was the “best quarter-to-date performance since the third quarter of 2007”.

There was little economic data from the US, seeing only the release of January wholesale inventories and wholesale sales. The January inventories figure declined by 0.7% while the sales number fell by 2.9%. Scheduled for release on Wednesday will be the February Federal Budget, expected to show a deficit of $200 billion, up from $175.56 billion in the previous month.

Fed Chairman Bernanke spoke earlier, saying the recession has been more severe than initially anticipated. He said if the government is successful in stabilize the banking system, there’s a good chance the recession can end later in 2009. Further, he said it was imperative to adopt a strategy to regulate the financial system as a whole and not just as components. Bernanke said the Fed should be involved in systemic risk regulation, even if not in a lead role.

Pound Slides

The sterling slumped further against the dollar and euro amid dismal UK economic reports, sliding to 1.3692 and 0.9246, respectively. January manufacturing output tumbled by 2.9% compared with a 2.2% decline a month prior and falling by 12.8% versus the year before at a decline of 10.2%. Industrial output also weakened, down 2.6% and worsening from the 1.7% decline in the previous month and falling by 11.4% versus a 9.5% drop a year earlier.

Cable trades just above the 1.37-level, with support starting at 1.37 followed by 1.3660 and 1.3630. Subsequent floors are eyed at 1.36, backed by 1.3550 and 1.35. On the upside, ceilings will emerge at 1.3760 followed by 1.38 and 1.3840. Additional gains will target 1.3880 and 1.39.

Published on  Tue, Mar 10 2009, 22:35 GMT

USD Recoups Amid Sharp Stock Advance

Tue, Mar 10 2009, 22:16 GMT
by Korman Tam

Forexnews.com

3/10/2009 3:45 PM: EUR/$..1.2654 $/JPY..98.68 GBP/$..1.3733 $/CHF..1.1630 AUD/$..0.6425 $/CAD..1.2858

USD Recoups Amid Sharp Stock Advance

The greenback has recovered from some of its earlier sharp losses against the euro, which slumped past the 1.28-level to 1.2822. The primary driver in the foreign exchange market on the Tuesday session was the strong rally in US equity bourses, with the Dow Jones surging by over 4.5%, the Nasdaq advancing by over 6.0% and the S&P 500 gaining by over 5%.

US equities regained their footing after heavy selling in recent sessions on the heels of an internal memo from Citigroup CEO Pandit, describing the current quarter as its best since 2007. Pandit said he was encouraged by the strength of Citigroup’s business in the current year and was profitable for the first two months of the year, adding it was the “best quarter-to-date performance since the third quarter of 2007”.

There was little economic data from the US, seeing only the release of January wholesale inventories and wholesale sales. The January inventories figure declined by 0.7% while the sales number fell by 2.9%. Scheduled for release on Wednesday will be the February Federal Budget, expected to show a deficit of $200 billion, up from $175.56 billion in the previous month.

Fed Chairman Bernanke spoke earlier, saying the recession has been more severe than initially anticipated. He said if the government is successful in stabilize the banking system, there’s a good chance the recession can end later in 2009. Further, he said it was imperative to adopt a strategy to regulate the financial system as a whole and not just as components. Bernanke said the Fed should be involved in systemic risk regulation, even if not in a lead role.

Pound Slides

The sterling slumped further against the dollar and euro amid dismal UK economic reports, sliding to 1.3692 and 0.9246, respectively. January manufacturing output tumbled by 2.9% compared with a 2.2% decline a month prior and falling by 12.8% versus the year before at a decline of 10.2%. Industrial output also weakened, down 2.6% and worsening from the 1.7% decline in the previous month and falling by 11.4% versus a 9.5% drop a year earlier.

Cable trades just above the 1.37-level, with support starting at 1.37 followed by 1.3660 and 1.3630. Subsequent floors are eyed at 1.36, backed by 1.3550 and 1.35. On the upside, ceilings will emerge at 1.3760 followed by 1.38 and 1.3840. Additional gains will target 1.3880 and 1.39.

Published on  Tue, Mar 10 2009, 22:16 GMT

USD Firms in early Asian Trading

Wed, Mar 4 2009, 22:28 GMT
by Korman Tam

Forexnews.com

3/3/2009 10:50 PM: EUR/$..1.2504 $/JPY..98.43 GBP/$..1.4024 $/CHF..1.1796 AUD/$..0.6330 $/CAD..1.2942

USD Firms in early Asian Trading

The greenback edged higher at the start of the Asian session, rallying sharply against the Aussie initially and pushing the sterling beneath the key 1.40-level. With US equity bourses still mired near its lowest levels in 12-years, risk aversion will continue to benefit the dollar – which has pushed the euro beneath the 1.25-handle.

US economic reports slated for release later today include the February ADP private sector payrolls, which are seen posting a loss of 615k jobs, deteriorating further from the loss of 522k jobs in January and non-manufacturing ISM. Consensus estimates for February non-manufacturing ISM call for a decline to 41.0 from 42.9, remaining mired beneath the key 50-level for its 5th consecutive month.

Traders will closely scrutinize Friday’s key labor report given the weakness in the US jobs market. The unemployment rate in February is expected to spike to 7.9%, a level not seen since 1984 and up sharply from 7.6% from January. The non-farm payrolls figure is estimated to reveal a loss of 600k jobs – its worse level since 1974.
 
Aussie Slides on GDP Contraction

The Australian dollar plunged sharply in early Wednesday trading plummeting by nearly 100-pips from 0.6380 to 0.6283 following dismal growth data. The report revealed an unexpected contraction in Australia’s GDP for the first time in 8-years, posting a 0.5% decline in Q4 versus calls for a 0.2% increase while edging up by 0.3% from the previous year.

The RBA’s Assistant Governor Edey anticipates short-term weakness and deems Australia’s risk of recession as borderline. The Reserve Bank of Australia surprised markets yesterday by leaving interest rates unchanged at 3.25%, with Bank Governor Stevens saying “the Australian economy has not experienced the sort of large contraction seen elsewhere”.

The Aussie recovered somewhat, recuperating above the 0.63-level to 0.6330. Nonetheless, the AUDUSD pair remains under pressure with support starting at 0.63, followed by 0.6270 and 0.6240. Subsequent floors are eyed at 0.62, backed by 0.6170 and 0.6140. Gains will target interim ceilings at 0.6365, followed by 0.64 and 0.6430. Additional gains will encounter additional resistance at 0.6460, backed by 0.65 and 0.6550.

Published on  Wed, Mar 4 2009, 22:28 GMT

USD Jumps Higher as Safe Haven Currency

Sun, Mar 1 2009, 22:09 GMT
by Korman Tam

Forexnews.com

2/27/2009 2:58 PM: EUR/$..1.2696 $/JPY..97.82 GBP/$..1.4321 $/CHF..1.1683 AUD/$..0.6428 $/CAD..1.2687

USD Jumps Higher as Safe Haven Currency

The greenback extended its gains versus the yen in the Friday session, while also edging higher against the euro and sterling. Dismal US data and renewed fears of bank nationalization prompted safe haven flows into the dollar.

Economic reports released earlier in the session pointed to a deepening US recession, with Q4 GDP posting an annualized 6.2% contraction – its steepest decline since 1982. The growth figures were considerably worse than both expectations at -5.4% and -3.8% previously. The Q4 PCE prices declined by 5.0% from a 5.5% decline in the prior reading while GDP sales fell by 6.4%, larger than calls for a 5.9% decline versus a 5.1% drop previously. Chicago PMI unexpectedly improved in February rising to 34.2 versus forecasts for a decline to 33.0 from 33.3 in January. The final reading for the February University of Michigan consumer sentiment survey improved from the preliminary reading at 49.1 to 50.5, albeit worse than the January report at 57.8

The US equity market recovered somewhat from earlier steep losses following news that the government would convert its preferred shares of Citigroup into common equity to give it up to 36% stake in the bank. News of the partial nationalization sent the Dow Jones sharply lower in the morning, plunging to just above the key 7,000-level at 7,033.62.

JPY Extends Losses

The yen continued to plunge against the greenback, dropping to its lowest level in 3-months at 98.60. The Japanese currency’s role as a safe-haven has lost its luster in recent weeks following the break of the key 92.75-level, sharply weakening in tandem with the latest round of weak economic reports from Japan.

Although the yen has recovered from some of its earlier losses, we anticipate further weakness in the currency over the coming weeks with our initial target seen at 99-figure. However, we look for the 100-level to cap additional moves higher in the USDJPY pair and expect a combination of repatriation prior to the end of the Japanese fiscal year and a return to its role as safe haven currency to benefit the yen.

Published on  Sun, Mar 1 2009, 22:09 GMT

JPY Plunges Across the Board

Tue, Feb 24 2009, 22:22 GMT
by Korman Tam

Forexnews.com

2/24/2009 3:00 PM: EUR/$..1.2856 $/JPY..96.80 GBP/$..1.4491 $/CHF..1.1599 AUD/$..0.6514 $/CAD..1.2416

JPY Plunges Across the Board

The dismal state of US economy was highlighted by another bout of disappointing economic reports earlier in the session. The Conference Board’s survey of consumer confidence plunged to its lowest level on record at 25 in February, sharply lower than expectations for the survey to ease to 35.0 from a downwardly revised 37.4 reading in January. With burgeoning unemployment and heightened pessimism over the state of the US economy, consumers will likely continue to sharply retrench over the coming quarters and potentially exacerbating the current economic recession. The Case-Shiller home price index continued to reveal rapid deterioration in the housing market as prices in December dropped 2.5% from the previous month, and down by a record 18.5% from a year earlier. Meanwhile, the Richmond Fed manufacturing survey declined by more than anticipated in February at -51 from -49 in January.

Federal Reserve Chairman Bernanke offered a somber assessment of the US economy in his semi-annual Congressional testimony. He acknowledged the current severe recession, but offered hope that if policy makers are successful in stabilizing the financial system there may be a recovery as early as 2010. Nonetheless, Bernanke admits that downside risk outweighs the upside, which is why he deems “strong government action” to be crucial in stabilizing the economy. He also addressed recent concerns over the prospect of nationalizing banks, saying a majority ownership of banks is not necessary given the very strong supervisory oversight in place.

The US equity bourses rebounded sharply in the Tuesday session amid reassurances from Fed Chairman Bernanke that nationalization of banks would not be needed at this juncture. The S&P 500 bounced by over 3%, while the Nasdaq and Dow Jones were up by 2.9% and 2.4%, respectively.

The greenback was mixed against the majors, rallying sharply against the yen while losing ground versus the euro and sterling. The Japanese yen plunged sharply following steep overnight losses in Tokyo’s Nikkei index. Also dragging the yen lower is continued fear that Japan’s economic fundamentals will deteriorate rapidly amid slumping approval ratings for Japan’s PM Aso. In the near term, we expect the yen to continue to slide against the greenback with our initial target around the 99-level.

Published on  Tue, Feb 24 2009, 22:22 GMT

Dollar Slumps on Bank Speculation

Sun, Feb 22 2009, 22:44 GMT
by Korman Tam

Forexnews.com

2/20/2009 4:13 PM: EUR/$..1.2846 $/JPY..93.10 GBP/$..1.4432 $/CHF..1.1523 AUD/$..0.6459 $/CAD..1.2489

Dollar Slumps on Bank Speculation

The dollar’s losses accelerated in the Friday session, tumbling to 1.2883 against the euro and 1.4482 versus the sterling as traders continued to pare their greenback positions ahead of the weekend. Global equity bourses struggled across the board, with the Dow Jones Industrial Average plunging to its lowest intraday level since 1997 at 7249.47. Meanwhile, spot gold rallied to its highest level since March 2008 at 1006.40 per ounce.

The foreign exchange market largely shrugged off this morning’s US economic releases, which saw the January consumer price creep higher by 0.3% versus a 0.7% decline in the previous month and flat on an annualized reading. The core CPI figures were slightly higher than expected with the monthly reading at 0.2%, versus calls for an increase to 0.1% from a flat reading in December, while edging up to 1.7%, down from 1.8% in the previous year.

The markets remained worried over potential nationalization of Citigroup and Bank of America, as expressed by Senate Banking Committee Chairman Chris Dodd. Given the lingering uncertainty over the outlook for the banking sector, next week’s government stress tests of banks’ balance sheets will be closely scrutinized and likely trigger another bout of heightened volatility.
 
EUR extends gains

The euro rallied sharply to 1.2885 despite further reports of dismal Eurozone economic data. The Eurozone PMI slumped to 33.6, from 34.4 a month earlier, while the services PMI dropped to 38.9 from 42.2. Germany’s February manufacturing PMI improved slightly from the previous month to 32.2 from 32.0 and the services PMI tumbled to 41.6 from 45.2 a month earlier.

We anticipate the euro to relinquish its gains next week as an environment of heightened risk aversion will likely continue to benefit the safe haven currencies. EURUSD will encounter resistance at 1.2860, followed by 1.29 and 1.2930. Subsequent ceilings are seen at 1.2965, backed by 1.30 and 1.3050. On the downside, we look for support to emerge at 1.28, followed by 1.2760 and 1.2730. Additional floors are seen at 1.27, followed by 1.2650 and 1.25.

Published on  Sun, Feb 22 2009, 22:44 GMT

USD Rallies on Mortgage Plan

Wed, Feb 18 2009, 22:35 GMT
by Korman Tam

Forexnews.com

2/18/2009 3:55 PM: EUR/$..1.2550 $/JPY..93.76 GBP/$..1.4235 $/CHF..1.1765 AUD/$..0.6390 $/CAD..1.2581

USD Rallies on Mortgage Plan

The greenback edged higher against the majors, pushing the euro towards 1.2515 and the yen just shy of the 94-level. US equities continued to slip lower, with the Dow Jones drifting to its lowest intra-day level since November 2008 around 7520. The key highlights of the session were another bout of soft data, details regarding President Obama’s foreclosure plan and the minutes from the last FOMC meeting.

Economic reports released earlier in the session revealed further deterioration in US fundamentals and highlighted the dismal outlook in the housing market. January housing starts plunged to a record low to 466k units compared with a revised 560k units from December, plummeting by nearly 17%. Building permits eased by 4.8% to 521k units versus 547k units. Meanwhile, industrial production remained mired in negative territory at -1.8%, improving marginally from the previous month at -2.0% and capacity utilization slipped to 72.0% from 73.60%.

President Obama unveiled the details for the government’s plan to stem further declines in the housing market. The plan calls for a $75 billion package to ease foreclosures by lowering mortgage payments to 31% of a borrower’s monthly income. The details specifically target homeowners and is aimed to avert the additional strain flood of foreclosures would have on the economy.

The minutes from the Fed’s January meeting echoed a dismal outlook among the Board members. The minutes stated “all but a few saw the risks to growth as tilted to the downside”, seeing “a significant risk that the economic recovery could be delayed and initially quite weak”. The Fed slashed its growth forecast for the year by 0.5% to 1.3% and anticipates long-term growth around 2.5%-2.7% and unemployment rate around 4.8%-5%.
 
Euro Tumbles

The euro came under pressure in the Wednesday session amid a dollar rally, falling to its lowest level since November 2008. Further losses will be tempered at 1.2530, backed by 1.25 and 1.2470. Subsequent floors are seen at 1.2440, followed by 1.24 and 1.2350. Meanwhile, on the upside, resistance starts at 1.2570, backed by 1.26 and 1.2640. Additional gains will target 1.2670 and 1.27.

Published on  Wed, Feb 18 2009, 22:35 GMT

USD & JPY Lower Ahead of G7

Sun, Feb 15 2009, 22:10 GMT
by Korman Tam

Forexnews.com

2/13/2009 1:55 PM: EUR/$..1.2901 $/JPY..91.88 GBP/$..1.4382 $/CHF..1.1580 AUD/$..0.6605 $/CAD..1.2381

USD & JPY Lower Ahead of G7

The dollar and the yen continued to slide in the Friday session as profit taking dictated moves in the foreign exchange market. The euro recovered back above the 1.29-level versus the greenback and toward 118.76 against the yen.

The University of Michigan consumer sentiment survey unexpectedly plunged to 56.2 in February, versus 61.2 in January and sharply worse than estimates for a decline to 61.0. The preliminary expectations component also dropped sharply, collapsing to 49.1 compared with calls for a marginal decline to 57.5 from 57.8 a month earlier. The sentiment survey bodes poorly for consumer spending over the coming months given the deterioration in economic fundamentals, particularly with no bottom in sight for the labor market. In spite of yesterday’s surprise improvement in retail sales figures, the sentiment survey underscores the hurdles ahead for the economy.

The US equity markets were slightly lower as traders took to the sidelines ahead of the Senate’s vote for the bank bail-out plan and stimulus package. The Dow Jones and S&P 500 are lower by just under 1% while the Nasdaq is slightly down by 0.3% by the afternoon session.

The G7 Finance Ministers meeting kicked off in Rome with a general anti-protectionist sentiment expressed by several officials, largely in response to recent messages echoed by US President Obama’s “Buy American” provision in the stimulus package. While it is unlikely the G7 communiqué will issue any comments on foreign exchange, Eurogroup chairman Juncker reiterated that excess volatility is undesirable.

Euro Bounces above 1.29

Data from the Eurozone revealed additional declines in economic activity, with the Q4 flash GDP estimate falling by more than expected. The flash estimate reflected a 1.5% contraction in economic growth in Q4, compared with a 0.2% decline in the previous quarter. On an annualized basis, GDP contracted by 1.2%, reversing a 0.6% increase a year earlier.

We expect the gains in the euro to be unsustainable over the medium-term and anticipate the single currency to retest recent lows. A breach of the recent 1.27 low against the dollar will raise prospects for a test of the 2 1/2 –year low from October 2008 around 1.2330

Published on  Sun, Feb 15 2009, 22:10 GMT

Safe haven currencies relinquish gains

Thu, Feb 12 2009, 22:32 GMT
by Korman Tam

Forexnews.com

2/12/2009 3:00 PM: EUR/$..1.2770 $/JPY..90.42 GBP/$..1.4162 $/CHF..1.1656 AUD/$..0.6434 $/CAD..1.2532

Safe haven currencies relinquish gains

The greenback and yen relinquished earlier session gains versus the majors as the euro edged up off lows to pop back above the 1.28-level and 116-handle, respectively.

The US economic reports released earlier in the session were mixed, with weekly jobless claims continuing to point toward deterioration in the labor market. Weekly jobless claims were larger than expected, at 623k versus forecasts for an improvement to 610k from a revised 631k a week earlier. Meanwhile, January retail sales were unexpectedly better than anticipated with the headline figure posting a 1.0% compared with a revised 3.0% decline a month earlier and the excluding automobiles reading up by 0.9% compared with a 3.2% drop previously. The December business inventories declined by 1.3% and exceeding the forecasted loss of 0.9% versus a 1.1% decline from November.

The calendar for Friday will see the release of the February University of Michigan consumer sentiment survey. Consensus estimates call for the preliminary survey to deteriorate to 60.2 versus 61.2 in January

Euro Regains Footing

The euro initially slumped against the dollar and yen, dropping to 1.2723 and 114.92, respectively. The Eurozone December industrial production posted disappointing results, lower by 2.6% versus a 1.6% decline a month earlier and plunging by 12.0% compared with a 7.7% drop a year earlier. Traders will look ahead to Q4 growth data from the Eurozone, with consensus estimates looking for the economy to contract by 1.3% on a quarterly basis versus a 0.5% decline and a 1.7% slide in GDP for the year, compared with a 0.9% contraction previously.

The single currency remains susceptible to risk aversion and we maintain our bias toward a weaker euro. EURUSD hovers near the 1.2780 region, with interim support seen at 1.2730, backed by 1.27 and 1.2660. Subsequent floors are eyed 1.2630, followed by 1.26 and 1.2550. On the topside, resistance will emerge at 1.28, followed by 1.2840 and 1.2870. Additional ceilings are eyed at 1.29, backed by 1.2930 and 1.2965.

Published on  Thu, Feb 12 2009, 22:32 GMT

Risk Aversion Prevails, US Equities Dive

Tue, Feb 10 2009, 22:49 GMT
by Korman Tam

Forexnews.com

2/10/2009 2:30 PM: EUR/$..1.2847 $/JPY..90.15 GBP/$..1.4478 $/CHF..1.1618 AUD/$..0.6492 $/CAD..1.2477

Risk Aversion Prevails, US Equities Dive

The safe-haven currencies benefited amid heightened risk aversion, with the dollar and yen advancing against the majors. US Treasury Secretary Geithner provided additional details on the Obama administration’s financial bail-out plan – prompting a sharp sell-off in stocks. The Dow Jones and S&P 500 were both lower by over 4% and the Nasdaq sliding by nearly 3.5% in the New York afternoon.

In Treasury Secretary Geithner’s speech, few additional details regarding specifics for the plan were revealed. Geithner described buying up to $1 trillion in banks’ toxic assets and up to $1 trillion in purchases of consumer debt – in an effort to free up the credit markets. Geithner fell short of providing any key details on a comprehensive bail-out program, prompting markets to sell-off sharply amid growing uncertainty over the prospects for the government to successfully.
 
Euro Pressured on Russian Debt Restructure rumor

The euro whipsawed around the 1.30-level against the greenback in the Tuesday session on a combination of news about the US financial rescue plan and speculation over potential debt restructuring by Russia. The heightened risk aversion prompted the euro to slide to 1.2812 versus the dollar and 116.68 against the yen.

The single currency’s slide was triggered by a report overnight in a Japanese newspaper that suggested Russian banks were mulling over plans to restructure nearly $400 billion in loans – triggering heightened anxiety over European banks’ exposure to Russia. Although the report was subsequently denied by Russian officials, the euro struggled to regain its footing throughout the session.

EURUSD remains mired near the 1.29-level, with support seen at 1.2880, followed by 1.2820 and 1.28. Further selling pressure will be tempered at 1.2770, backed by 1.2740 and 1.27. Gains will target interim resistance at 1.2930, followed by 1.2970 and 1.30. Subsequent ceilings are seen at 1.3040, followed by 1.3070 and 1.31.

Published on  Tue, Feb 10 2009, 22:49 GMT

Risk Aversion Prevails, US Equities Dive

Sun, Feb 8 2009, 21:42 GMT
by Korman Tam

Forexnews.com

2/10/2009 2:30 PM: EUR/$..1.2847 $/JPY..90.15 GBP/$..1.4478 $/CHF..1.1618 AUD/$..0.6492 $/CAD..1.2477

Risk Aversion Prevails, US Equities Dive

The safe-haven currencies benefited amid heightened risk aversion, with the dollar and yen advancing against the majors. US Treasury Secretary Geithner provided additional details on the Obama administration’s financial bail-out plan – prompting a sharp sell-off in stocks. The Dow Jones and S&P 500 were both lower by over 4% and the Nasdaq sliding by nearly 3.5% in the New York afternoon.

In Treasury Secretary Geithner’s speech, few additional details regarding specifics for the plan were revealed. Geithner described buying up to $1 trillion in banks’ toxic assets and up to $1 trillion in purchases of consumer debt – in an effort to free up the credit markets. Geithner fell short of providing any key details on a comprehensive bail-out program, prompting markets to sell-off sharply amid growing uncertainty over the prospects for the government to successfully.
 
Euro Pressured on Russian Debt Restructure rumor

The euro whipsawed around the 1.30-level against the greenback in the Tuesday session on a combination of news about the US financial rescue plan and speculation over potential debt restructuring by Russia. The heightened risk aversion prompted the euro to slide to 1.2812 versus the dollar and 116.68 against the yen.

The single currency’s slide was triggered by a report overnight in a Japanese newspaper that suggested Russian banks were mulling over plans to restructure nearly $400 billion in loans – triggering heightened anxiety over European banks’ exposure to Russia. Although the report was subsequently denied by Russian officials, the euro struggled to regain its footing throughout the session.

EURUSD remains mired near the 1.29-level, with support seen at 1.2880, followed by 1.2820 and 1.28. Further selling pressure will be tempered at 1.2770, backed by 1.2740 and 1.27. Gains will target interim resistance at 1.2930, followed by 1.2970 and 1.30. Subsequent ceilings are seen at 1.3040, followed by 1.3070 and 1.31.

Published on  Sun, Feb 8 2009, 21:42 GMT

USD Edges Higher, Awaits BoE, ECB

Wed, Feb 4 2009, 22:07 GMT
by Korman Tam

Forexnews.com

2/4/2009 3:15 PM: EUR/$..1.2852 $/JPY..89.44 GBP/$..1.4455 $/CHF..1.1593 AUD/$..0.6426 $/CAD..1.2322

USD Edges Higher, Awaits BoE, ECB

The greenback edged higher against the euro and sterling in the Wednesday session, rallying to 1.2814 and 1.4327, respectively. US economic data was mixed today, consisting of January ISM non-manufacturing survey and the ADP private sector payrolls report.

The January ISM non-manufacturing survey unexpectedly improved to 44.2, from 38.9 in December. The ADP private sector payrolls report in January was slightly better than expected, revealing a loss of 522k jobs instead of the 530k loss forecasted, and improving from December’s loss of 693k jobs. Traders will look ahead to Friday’s January labor report. The January unemployment rate is expected to edge further 7.4%, up from 7.4% previously, while non-farm payrolls are estimated to improve to 500k versus 524k a month earlier.
 
Euro Slides, Awaits ECB

The euro slid to near the 1.28-handle amid soft Eurozone data. The December retail sales figures were flat on a monthly basis, while posting a 1.6% decline versus a 1.5% decline a year earlier. The Eurozone services PMI was slightly worst than expected at 42.2, versus 42.1 previously.

Although the ECB is not expected to change rates when it announces its decision later in the session, the key focus will be on the Bank President Trichet’s subsequent press conference. With the ECB seen leaving rates unchanged at 2.0%, the focus will be on hints of what the Bank will do at that March meeting. We expect the ECB to signal a 50-basis point cut at the next meeting and foresee the Bank to cut by a total of 100-basis points by year end, bringing the benchmark lending rate to 1.0%.

EURUSD holds steady at 1.2850, with support seen at 1.2830, followed by 1.28 and 1.2750. Additional support is eyed at 1.2720, backed by 1.27 and 1.2660. Gains will target interim resistance at 1.2870, followed by 1.29 and 1.2940. Subsequent ceilings are seen at 1.2980, backed by 1.30 and 1.3040.

Sterling Steady Ahead of BoE

The Bank of England is expected to cut rates further when it announces its decision early Thursday morning. Consensus estimates look for the BoE to ease rates by 50-basis points to 1%. Given the rapid deterioration in UK economic fundamentals, we expect the BoE to continue supporting the economy with aggressive rate cuts.

Published on  Wed, Feb 4 2009, 22:07 GMT

US GDP Contracts by most since 1982

Sun, Feb 1 2009, 21:41 GMT
by Korman Tam

Forexnews.com

1/30/2009 3:40 pm: EUR/$..1.2799 $/JPY..89.76 GBP/$..1.4462 $/CHF..1.1603 AUD/$..0.6345 $/CAD..1.2274

US GDP Contracts by most since 1982

The greenback edged up higher against the majors amid heightened risk aversion, pushing the euro beneath the 1.28-level. Data from the US pointed toward further deterioration in fundamentals, suggesting the recession continues to worsen.

US economic reports released earlier revealed a sharp contraction in GDP growth, down by an annualized 3.8% in Q4 versus a 0.5% decline previously. Although the drop in GDP was less than the anticipated drop of 5.4%, it was still the steepest contraction in the US economy since 1982. The Q4 sales component of GDP declined by 5.1% versus a 1.3% decline previously, while PCE price index posted a 5.5% drop versus a 5% decline. The Q4 employment costs eased to 0.5% from 0.7%. The January Chicago PMI declined to 33.3 from 35.1 in December, while the University of Michigan consumer sentiment survey improved to 61.2 in January, up from 60.1.
 
Euro Remains under Pressure

The single currency continued to slump against the greenback, dipping beneath the 1.28-handle as economic fundamentals in the Eurozone remain soft. The December unemployment rate jumped higher to 8.0%, outpacing estimates for an increase to 7.9% from 7.8%. Eurozone flash inflation in January eased to 1.1%, a larger than expected decline from 1.6% a month earlier.

EURUSD holds steady near the 1.28-handle with support seen at 1.2760, followed by 1.2730 and 1.27. Subsequent floors will emerge at 1.2670, backed by 1.2640 and 1.26. On the upside, gains will target interim resistance at 1.2830, backed by 1.2865 and 1.29. Additional ceilings are eyed at 1.2940, followed by 1.2970 and 1.30.

Published on  Sun, Feb 1 2009, 21:41 GMT

USD Rallies following FOMC

Thu, Jan 29 2009, 02:25 GMT
by Korman Tam

Forexnews.com

1/28/2009 3:50 PM: EUR/$..1.3144 $/JPY..90.26 GBP/$..1.4216 $/CHF..1.1513 AUD/$..0.6647 $/CAD..1.2155

USD Rallies following FOMC

The dollar rallied sharply following the FOMC’s monetary policy announcement, surging from 1.3280 against the euro to just above the 1.31-figure and jumping to 90.75 versus the yen.

The Fed left monetary policy unchanged at its current range of 0%-0.25%, saying that “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time”. The FOMC delivered a somber assessment of the economy; attributing the weakness to steep declines in industrial production, housing, and employment; thus prompting a retrenchment of spending by consumers and businesses. Although the Fed anticipates a rebound in the economy later in the year, it deems the downside risks as significant. Further, given the limited scope the Fed has to shift interest rates lower, it reiterated its stance to expand the quantity of agency debt and mortgaged-backed securities purchases to support the mortgage and housing markets. The FOMC also anticipates inflation pressures to remain subdued over the coming quarters.

US economic data will be the focus for the Thursday session, with the calendar consisting of weekly jobless claims, durable goods orders and new home sales. Weekly jobless claims are seen falling slightly to 580k from a week earlier at 589k, while December durable goods orders are estimated to post a 2.0% decline versus a 1.5% drop in the previous month. New home sales in December are forecasted to ease to 400k units, compared with 407k units a month earlier.
 
Euro Slumps

The euro retreated sharply following the FOMC’s policy statement, drifting toward the 1.31-handle. Traders will look ahead to Germany’s January unemployment data, with the unemployment rate creeping higher to 7.7% from 7.6% and the unemployment change climbing to 30k from 18k. The Eurozone consumer sentiment indicator is seen deteriorating to -31 from -30, while the business climate is also seen weakening, falling to -3.5 versus -3.17.

EURUSD will find support at the 1.31-figure, followed by 1.3060 and 1.3020. Subsequent floors are seen at 1.30, backed by 1.2960 and 1.2930. On the upside, ceilings will emerge at 1.3160, backed by 1.32 and 1.3240. Additional gains will target 1.3270, followed by 1.33 and 1.3350.

Published on  Thu, Jan 29 2009, 02:25 GMT

USD Edges Higher, Awaits FOMC

Tue, Jan 27 2009, 21:43 GMT
by Korman Tam

Forexnews.com

1/27/2009 2:55 PM: EUR/$..1.3166 $/JPY..88.87 GBP/$..1.4144 $/CHF..1.1376 AUD/$..0.6626 $/CAD..1.2265

USD Edges Higher, Awaits FOMC

The major currencies relinquished earlier gains versus the greenback in the New York session as safe haven flows propped up the dollar. The euro slid from 1.3328 to 1.3120 following dismal economic data from the US. The Conference Board’s survey of consumer confidence plunged to its lowest level on record in January, dropping to 37.7 and missing estimates for an improvement to 39 from a revised 38.6 a month earlier. The Case-Shiller home price index also deteriorated, with the monthly figure in November down by 2.2% and the annualized reading declining by 18.2%. Meanwhile, the January Richmond Fed survey improved, with the composite manufacturing index rising to -49 versus -55 a month earlier and the services revenue index improving to -19 from -30 in December.

The FOMC kicked off its two-day monetary policy meeting today and is scheduled to announce the results on Wednesday at 2:15pm. With interest rates hovering near zero, markets will focus more closely on the accompanying statement for the Fed’s assessment on the economy and projections for growth and inflation. Another issue to be closely scrutinized will be whether Fed Chairman Bernanke addressed the topic of inflation targeting. The minutes from the previous meeting hinted at that possibility, when it suggested providing greater clarity on the Fed’s goals for inflation.

Euro Eases

The euro bounced higher initially in the London session, edging up to 1.3328 before sliding back toward 1.3120. Economic data from the Eurozone was better than expected. Germany’s IFO sentiment survey improved to 83.0, beating estimates for a decline to 81.4 from 82.6. The current conditions index fell to 86.8, but less than the forecasted decline to 85.0 from 88.8, while the expectations component improved to 79.4 from 76.8. The Eurozone November current account deficit expanded 16.0 billion euros from a month earlier at 6.4 billion euros.

EURUSD will encounter interim resistance at 1.32, followed by 13230 and 1.3260. Subsequent ceilings are seen at 1.33, followed by 1.3330 and 1.3370. On the downside, support begins at 1.3150, backed by 1.3120 and 1.31. Subsequent floors are eyed at 1.3050, followed by 1.30 and 1.2965.

Published on  Tue, Jan 27 2009, 21:43 GMT

GBP Plunges Amid Heightened Banking Fears

Wed, Jan 21 2009, 22:09 GMT
by Korman Tam

Forexnews.com

1/21/2009 2:30 PM: EUR/$..1.2903 $/JPY..88.84 GBP/$..1.3787 $/CHF..1.1591 AUD/$..0.6553 $/CAD..1.2627

GBP Plunges Amid Heightened Banking Fears

The dollar and yen benefited from another bout of heightened risk-aversion, rallying sharply against the euro and sterling as a result of safe-haven flows. Both currencies will likely continue to reap the rewards from growing apprehension over the banking system and the extent and duration of the global economic recession.

The economic calendar today was light, with the release of the NAHB housing survey, which drifted lower to 8 in January versus 9 a month earlier. The housing index fell to its lowest level on record, with expectations of home sales over the next 6 months at 17 in January versus 16 from December. The Thursday session will see December building permits, housing starts and weekly jobless claims. Building permits are estimated to slip to 610k units, down from 615k units in November. Housing starts are also seen falling, down to 610k units versus 625k units a month prior. Meanwhile, weekly jobless claims are estimated to edge higher to 540k from 524k.
 
Pound Hammered

The sterling sell-off extended into Wednesday with steep declines across the board, plunging to multi-decade lows against the greenback at 1.3624. Plaguing the pound are fears over the stability of the UK banking system and whether the bail-out measures will ultimately succeed. The pound also sold-off sharply versus the euro and yen, collapsing to 0.9428 and 119.44, respectively.

Economic reports released from the UK overnight were largely in line with expectations. The November ILO unemployment rate crept up marginally to 6.1% versus 6.0% in the previous month, while the claimant count edged up to 77.9k from 75.7k, albeit less than forecast.

Cable slumped to its lowest level since 1986 at 1.3624. The pair has since clawed back above the 1.37-handle with interim resistance eyed at 1.3730, followed by 1.3765 and 1.38. Additional ceilings are seen at 1.3840, backed by 1.3860 and 1.39. On the downside, floors will emerge at 1.37, followed by 1.3650 and 1.3620. Subsequent support is seen at 1.36, backed by 1.3550 and 1.35.

Published on  Wed, Jan 21 2009, 22:09 GMT

USD Surges vs GBP

Tue, Jan 20 2009, 22:12 GMT
by Korman Tam

Forexnews.com

1/20/2009 3:14 PM: EUR/$..1.2884 $/JPY..89.78 GBP/$..1.3906 $/CHF..1.1480 AUD/$..0.6479 $/CAD..1.2658

USD Surges vs GBP

The dollar surged sharply against the sterling and the euro, rallying to its highest level since June 2001 versus the pound at 1.3860 and to 1.2855 against the euro. The key highlight of the US session was the inauguration of President Obama, which had little impact on the currency market.
 
Pound Plunges

The sterling tumbled to its lowest level since 2001 at 1.3860 against the greenback. Fears over the stability of the UK banking system prompted a sell-off in the sterling as news of another bank bail-out hit the wires, with the government announcing plans to boost its stake in RBS.

Separately, BoE Governor King expects Q4 GDP to have declined sharply, with a marked contraction likely for the first half of 2009. He says there’s still a risk for inflation to undershoot target in spite of recent big rate cuts.

We expect the pound to remain under pressure in the coming sessions, with additional reports likely to signal further deterioration in the economy.

Loonie Slumps on BoC Cut

The Bank of Canada cut its benchmark interest rate by 50-basis points to a record low at 1% earlier in the session, prompting sellers to dump the Canadian dollar to a new one-month low at 1.2694. In the accompanying policy statement, the BoC offered a dire assessment of the economy, acknowledging that Canada’s economy was already in recession. It said that Canadian exports have fallen dramatically and domestic demand was slumping due to declines in real income, household wealth and confidence. The BoC expects the economy to continue to contract, anticipating a 1.2% decline in real GDP for 2009. The Bank also hinted at the possibility for further easing, saying “it will continue to monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required to achieve the 2% target over the medium term.

The Loonie fell to its lowest level in a month just shy of the 1.27-level. Resistance is seen at 1.2740, followed by 1.2770 and 1.28. Subsequent ceilings are eyed at 1.2830, backed by 1.2860 and 1.29. On the downside, support begins at 1.2650, followed by 1.26 and 1.2540. Additional floors are eyed at 1.25, backed by 1.2470 and 1.2440.

Published on  Tue, Jan 20 2009, 22:12 GMT

EUR Slumps on ECB Rate Cut

Thu, Jan 15 2009, 23:15 GMT
by Korman Tam

Forexnews.com

1/15/2009 2:07 PM: EUR/$..1.3129 $/JPY..89.85 GBP/$..1.4634 $/CHF..1.1237 AUD/$..0.6620 $/CAD..1.2554

EUR Slumps on ECB Rate CuT

The greenback was higher against the euro in the Thursday session on a combination of mixed US economic reports and a 50-basis point rate cut by the ECB. Weekly jobless claims were higher than expected, jumping past the 500k figure to 524k and up from a week earlier at 467k. The NY Fed manufacturing survey improved by more than anticipated to -22.2 in January, versus -25.76 from a month earlier. The Philadelphia Fed business survey improved by more than expected to -24.3 in January versus -36.1 a month earlier.

Economic reports in the coming session include December CPI, industrial production, and net TIC flows.
 
Euro Retreats on ECB Cut

The ECB, as largely expected, cut its benchmark lending rate by 50-basis points to 2.0%, its lowest level in 3-years. The euro was initially higher following the decision, rallying past the 1.32-handle, but subsequently relinquishing the 1.31-level to fall toward 1.3060.

Bank President Trichet raised the prospects for additional ECB rate cuts over the coming months in his press conference today. Trichet tempered expectations for a move in February but left the door open for another rate cut in March. He offered a downbeat assessment on the Eurozone economy, expecting weakness to persist in the coming quarters, with risks to growth on the downside.

EURUSD will encounter support at 1.3030, followed by 1.30 and 1.2950. Additional floors are seen at 1.29, backed by 1.2860 and 1.2830. On the upside, gains will target resistance at 1.3080, 1.3120 and 1.3170. Subsequent ceilings are seen at 1.32, backed by 1.3240 and 1.3270.

Published on  Thu, Jan 15 2009, 23:15 GMT

USD Mixed, Eyes ECB

Wed, Jan 14 2009, 22:12 GMT
by Korman Tam

Forexnews.com

1/14/2009 3:00 PM: EUR/$..1.3150 $/JPY..89.06 GBP/$..1.4577 $/CHF..1.1175 AUD/$..0.6602 $/CAD..1.2457

USD Mixed, Eyes ECB

The dollar was little changed on the Wednesday session, hovering near 1.3170 against the euro and 1.46 versus the pound. US economic reports continue to point toward further deterioration in fundamentals raising prospects for a prolonged recession.

Retail sales in December continued to deteriorate, plunging by 2.7% which was sharply worse than the expected improvement to -1.2% from -1.8% in November. The excluding-autos figure also dropped sharply, lower by 3.1% compared with a 1.6% plunge a month earlier. The decline in retail sales marked its sixth consecutive monthly drop – its worst on record. Business inventories were also worst than expected, lower by 0.7% for November versus 0.6% in October.

The Thursday economic calendar will see weekly jobless claims, January NY Fed manufacturing survey, December PP and the January Philadelphia Fed business index. Weekly jobless claims are seen climbing higher to 500k from 467k a week earlier, while the NY Fed manufacturing survey is expected to improve marginally to -25.0 from -25.76. Producer prices in December are seen declining by 2.0% versus a 2.2% decline a month earlier while core PPI is estimated to remain unchanged at 0.1%.
 
Euro Recovers Ahead of ECB

The euro bounced off a fresh one-month low against the dollar at 1.3092 to recover toward the 1.3170-handle by the New York afternoon. Eurozone economic reports released overnight included Germany 2008 GDP and Eurozone November industrial production. Germany’s 2008 GDP declined to 1.3% from 2.5% in the previous year. Meanwhile, Eurozone industrial production in November declined by 1.6% versus a 1.2% decline a month earlier.

The key highlight for the coming session will be the ECB monetary policy decision at 7:45 AM New York time. The Bank is largely expected to ease rates by 50-basis points to 2.0%. The subsequent press conference will be closely scrutinized for clues as to whether further rate cuts can be anticipated over the coming months. We look for the ECB to continue slashing its benchmark interest rate, with another 100-basis point in cuts over the coming year.

EURUSD has recovered back toward the 1.3170 level, with additional resistance seen at 1.32, followed by 1.3240 and 1.3270. Subsequent ceilings are eyed at 1.33, followed by 1.3350 and 1.3380. On the downside, support is seen at 1.3140, backed by 1.31 and 1.3070. Additional floors will emerge at 1.3030, followed by 1.30 and 1.2960.

Published on  Wed, Jan 14 2009, 22:12 GMT

Euro Slumps, Eyes Data

Tue, Jan 13 2009, 22:10 GMT
by Korman Tam

Forexnews.com

1/13/2009 2:50 PM: EUR/$..1.3192 $/JPY..89.08 GBP/$..1.4514 $/CHF..1.1184 AUD/$..0.6629 $/CAD..1.2269

Euro Slumps, Eyes Data

The dollar rallied sharply against the euro in the Tuesday session, surging to its highest level in over a month at 1.3142. The currency benefited from an unexpected narrowing in the US trade deficit to $40.44 billion in November from calls for a deficit of $51.5 billion and improving from October at $57.19 billion. The deficit narrowed to its lowest level since 2003 and was attributed to a sharp decline in exports, which contracted by 5.8% in November and imports shrunk by 1.6%.

The economic calendar for Wednesday consists of December retail sales, with the headline expected to improve to -1.2% compared with -1.8% in November. The core retail sales figure is also seen improving to -1.3% in December versus -1.6% a month earlier.
 
Euro Slides

The euro plunged to its lowest level since early December at 1.3142 on a combination of safe-haven flows into the greenback and traders positioning ahead of the key ECB monetary policy meeting on Thursday. In the session ahead, traders will analyze Germany GDP, which is estimated to decline to 1.8% from 2.5% and November industrial production, seen deteriorating further to -1.8% from -1.2% a month earlier and -6.0% compared with -5.3% in the previous year.

The ECB is expected to announce its monetary policy on Thursday at 7:45 AM with a 50-basis point rate cut to 2.0% widely anticipated. Given the sharp deterioration in economic fundamentals throughout the Eurozone, we continue to look for the ECB to ease policy to stimulate the economy. The subsequent press conference from Bank President Trichet will be closely scrutinized for clues as to whether additional rate cuts can be anticipated.

EURUSD has recovered back toward the 1.32-level, with additional resistance seen at 1.3240, followed by 1.3270 and 1.33. Subsequent ceilings are eyed at 1.3350, followed by 1.3380 and 1.34. On the downside, support is seen at 1.3170, backed by 1.3140 and 1.31. Additional floors will emerge at 1.3070, followed by 1.3030 and 1.30.

Published on  Tue, Jan 13 2009, 22:10 GMT

USD Slumps Ahead of Payrolls

Thu, Jan 8 2009, 22:49 GMT
by Korman Tam

Forexnews.com

1/8/2009 3:30 PM: EUR/$..1.3690 $/JPY..91.18 GBP/$..1.5216 $/CHF..1.0941 AUD/$..0.7098 $/CAD..1.1796

USD Slumps Ahead of Payrolls

The greenback remains under pressure in the Thursday session, tumbling to multi-week lows against the sterling at 1.5372 and falling toward the 1.38-handle versus the euro. Weekly jobless claims, released earlier in the session improved to 467k, beating consensus estimates for an increase to 540k, from a week earlier at 492k.

The key highlight will be Friday’s December labor report. The December unemployment rate is expected to spike to its highest level since 1993 at 7.0%, while non-farm payrolls are seen reflecting a loss of 550k jobs compared with a loss of 533k jobs a month earlier. With the dismal labor report largely priced in, we look for a potential move to the upside in the greenback against the euro and sterling as traders book profits from the sharp gains in both currencies.
 
Sterling Whipsaws on BoE

The pound initially surged across the board following the monetary policy decision by the Bank of England, rallying to its highest level since mid-December against the dollar at 1.5372 and euro at 0.8895. The Bank of England, as expected, slashed its benchmark interest rate by 50-basis points to an all-time low at 1.5% in order to jumpstart the ailing UK economy. In the accompanying statement, the Bank offered a bleak assessment, stating “business surveys suggest that the pace of contraction in activity increased during the fourth quarter of 2008 and that output is likely to continue to fall sharply during the first part of this year”, with “the outlook for business and residential investment has deteriorated”. The Bank expects inflation to decline further, “reflecting waning contributions from retail energy and food prices”, but expressed caution for “a significant risk of undershooting the 2% CPI inflation target in the medium term at the existing Bank Rate”.

UK economic reports due out in the coming session include November industrial production, producer prices, and manufacturing output. Industrial output is mixed, improving to -0.6% in November compared with a -1.7% decline in the previous month while falling by 5.3% from -5.2% a year earlier.

Cable pulled off its multi-week highs against the greenback to retreat beneath the 1.52-handle. Support is seen at 1.5160, followed by 1.5130 and 1.51. Subsequent floors are eyed at 1.5070, backed by 1.5030 and 1.50. On the upside, gains will target interim resistance at 1.5240, followed by 1.5280 and 1.53. Additional ceilings will emerge at 1.5330, backed by 1.5370 and 1.54.

Published on  Thu, Jan 8 2009, 22:49 GMT

Greenback Slumps on Soft data

Tue, Jan 6 2009, 22:11 GMT
by Korman Tam

Forexnews.com

1/6/2009 3:20 PM: EUR/$..1.3498 $/JPY..93.83 GBP/$..1.4922 $/CHF..1.1184 AUD/$..0.7230 $/CAD..1.1826

Greenback Slumps on Soft Data

The dollar relinquished its recent gains versus the majors, tumbling by over four big figures against the pound to 1.4960. The economic data released earlier in the session was mixed, with durable goods, factory orders, pending home sales and non-manufacturing ISM reported in the Tuesday session.

The November headline durable goods orders posted a 1.5% decline, worst than expected and deteriorating from a 1.0% decline a month earlier. The excluding transportation durable goods orders increased by 0.6%, albeit lower than the 1.2% recorded previously. Factory orders slumped by 4.6%, compared with a revised 6.0% decline in October. Pending home sales remained soft, down 4.0% in November versus a revised 4.4% decline a month earlier to 82.3. The December non-manufacturing ISM unexpectedly improved to 40.6 from 37.3 a month earlier.

Although the calendar for Wednesday is light, traders will closely scrutinize the December ADP private sector payrolls figure – which is estimated to post a loss of 475k jobs, deteriorating sharply from a month earlier at a loss of 250k jobs. The report will be assessed as a proxy to Friday’s key non-farm payrolls figure and unemployment rate, which are seen at -500k and 7.0%, respectively. Further, the unemployment rate will be at its highest level since 1993.

The minutes from the December FOMC meeting, in which the Fed cut rates to an unprecedented range of 0%-0.25%, revealed a gloomy outlook on the economy. The FOMC acknowledged deteriorating labor market conditions as well as declines consumer spending, business investment and industrial production. The Fed “anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time”. The minutes added “inflationary pressures have diminished appreciably” and “expects inflation to moderate further in coming quarters’. The Fed said that over the coming quarters, it would purchase substantial quantities of debt in order to support the housing and mortgage markets. With interest rates already hovering around 0%, the FOMC pledged to “consider ways of using its balance sheet to further support credit markets and economic activity”.

Published on  Tue, Jan 6 2009, 22:11 GMT

USD Rallies, Awaits Data

Mon, Jan 5 2009, 22:07 GMT
by Korman Tam

Forexnews.com

1/5/2009 2:30 PM: EUR/$..1.3601 $/JPY..93.25 GBP/$..1.4718 $/CHF..1.1078 AUD/$..0.7152 $/CAD..1.1889

USD Rallies, Awaits Data

The dollar bounced against the majors at the start of the week, rallying to 1.3555 versus the euro from 1.3962 and edging up to 93.56 against the yen. The greenback climbed higher on a combination of a proposed fiscal stimulus plan by President-elect Barack Obama and profit taking from the euro’s sharp year-end gains – jumping to its highest level in 3-weeks versus the single currency.

A barrage of economic reports is slated for release from the US this week culminating with the highly anticipated December jobs data. The Tuesday session consist of December non-manufacturing ISM, durable goods orders, and pending home sales. Non-manufacturing ISM is expected to drift lower to 37.0 in December from 37.3 a month earlier, while pending home sales are seen deteriorating further with a 1.0% decline from a loss of 0.7% previously. Although the calendar on Wednesday is light, traders will closely scrutinize the ADP private-sector payrolls data – which is estimated to plunge sharply to -473k in December versus -250k a month earlier. The key highlight of the week will be the December jobs report, with the unemployment rate expected to spike to its highest level since 1993 to 7.0% from 6.7% in the previous month. The non-farm payrolls reading are seen revealing a loss of 500k jobs in December versus 533k in November.
 
Euro Retreats

The euro relinquished its gains versus the dollar and sterling, prompted by profit-taking following December’s sharp run-up. Fears that economic conditions in the Eurozone will continue to deteriorate rapidly and lead the ECB to aggressively cut rates further have weighed on the euro.

The calendar from the Eurozone will see Germany’s December labor report, Eurozone November PPI, December consumer sentiment, Germany’s November trade balance, industrial orders, Eurozone unemployment, retail sales, and Germany’s Industrial production.

We expect the euro to extend its slide over the coming week with our initial target against the dollar around the 1.33-handle. Interim support is expected at 1.3575, followed by 1.3540 and 1.35. Additional floors will emerge at 1.3460, backed by 1.3430 and 1.34. Gains will encounter ceilings at 1.3650, followed by 1.37 and 1.3740. Subsequent ceilings will emerge at 1.3770, backed by 1.38 and 1.3840.

Published on  Mon, Jan 5 2009, 22:07 GMT

USD Sell−Off Accelerates

Wed, Dec 17 2008, 22:19 GMT
by Korman Tam

Forexnews.com

12/17/2008 3:05 PM: EUR/$..1.4341 $/JPY..87.84 GBP/$..1.5472 $/CHF..1.0786 AUD/$..0.7003 $/CAD..1.2008

USD Sell-Off Accelerates

Traders continued to punish the greenback following yesterday¡¯s unprecedented rate cut by the FOMC to lower its key interest rate to a target range of 0 to 0.25%. The dollar plunged to a fresh 13-year low against the yen at 87.16 and a new two-month low versus the euro, losing nearly 5-big figures for its largest one-day decline to 1.4437.

With the Japanese currency trading at its highest level in over a decade, markets will remain vigilant against possibly BoJ intervention. Government officials have offered conflicting sentiments with Chief Cabinet Secretary Kawamura expressing his desire for the Bank to Japan to take appropriate action to stem the currency¡¯s sharp gains. However, Japan¡¯s Finance Minister Nakagawa said intervening in the currency market was not a consideration at this point, suggesting the movements had not been too sharp. With trading volume likely to wind down over the coming holidays, we would not rule out the possibility for the Bank of Japan to step in during thinly traded markets to quickly move the dollar/yen pair back toward the 100-level.

The dollar breached through several key support levels against the majors, suggesting the sell-off may pick up steam over the coming sessions. With thin markets expected over the coming weeks, we anticipate heightened volatility that could possibly send the euro toward 1.4865.

Economic reports released overnight saw key reports from the Eurozone and UK. From the UK, the data included unemployment claimant count, October unemployment rate, and the CBI index. The claimant count for October surged to 75.7k from 36.5k a month earlier ¨C bringing the total claimant count to 1.072 million, above the 1 million-level for the first time since 2001. Meanwhile, the unemployment rate jumped to 6.0% versus 5.8% previously. In the coming session, traders will turn to UK November retail sales and public sector net borrowing.

The Eurozone reports saw German November CPI decline by 0.5% on a monthly basis, compared with a 0.2% drop previously and up 1.4% on an annualized basis versus a 2.4% increase a year earlier. Eurozone inflation declined by 0.5% in November from the previous month and increased 2.1% on the year. Eurozone data slated for Thursday will see Germany¡¯s December Ifo sentiment survey, which is expected to deteriorate to 84, from 85.8.

Published on  Wed, Dec 17 2008, 22:19 GMT

USD Slumps, Awaits FOMC

Mon, Dec 15 2008, 23:06 GMT
by Korman Tam

Forexnews.com

12/15/2008 3:05 PM: EUR/$..1.3665 $/JPY..90.60 GBP/$..1.5252 $/CHF..1.1600 AUD/$..0.6644 $/CAD..1.2382

USD Slumps, Awaits FOMC

The dollar sold off sharply at the start of the week, plunging from 1.3349 to 1.3702 against the euro – its lowest level in two months and falling just shy of the 1.54-handle versus the sterling. US economic data released earlier in the session were largely in line with consensus estimates. The December NY Fed manufacturing survey was slightly better than expected at -25.76 from -25.43 a month earlier. Industrial production posted a 0.6% decline in November, compared with a 1.3% increase a month earlier and capacity utilization was unchanged at 75.4%. Meanwhile, the NAHB housing market index for December held steady at 9.

The FOMC kicks off its two-day monetary policy meeting and will announce the results on Tuesday at 2:15 PM. We look for the Fed to cut its benchmark lending by 75-basis points to 0.25%. The key highlight will be the accompanying Fed policy statement, in which it is likely to acknowledge the current recessionary landscape. Moreover, markets will look for guidance on whether interest rates may be lowered to zero. The greenback could benefit if the Fed signals a reluctance to ease its benchmark lending rate to zero.
 
JPY Shrugs off Dismal Tankan

The Bank of Japan’s quarterly Tankan survey underscored the deteriorating economic conditions and raised speculation that the BoJ may need cut rates closer to zero in an effort to jumpstart the economy. The Q4 large manufacturers’ diffusion index plunged at its sharpest pace since 1975 to minus 23 from minus 3 in Q3 – also its lowest level in six years. The outlook for large manufacturers remains bleak, with the Q1 2009 diffusion index seen deteriorating further to minus 36. Large firms also expect to cut their capital expenditures by 0.2% by Q1, slightly better than estimates for a 0.5% drop. On a positive note, the Q4 all firms employment index improved to 4, from minus 2 in Q3.

USDJPY continues to trade near 13-year lows, mired just above the 90-figure. Interim support begins at 90, followed by 89.70 and 89.40. Subsequent floors are seen at 89, backed by 88.60 and 88.15. On the upside, gains will target resistance at 90.65, followed by 91 and 91.30. Additional ceilings will emerge at 91.60, backed by 92 and 92.40.

Published on  Mon, Dec 15 2008, 23:06 GMT

USD Plunges on Data

Sun, Dec 14 2008, 22:22 GMT
by Korman Tam

Forexnews.com

12/11/2008 7:20 PM: EUR/$..1.3315 $/JPY..91.50 GBP/$..1.5012 $/CHF..1.1852 AUD/$..0.6687 $/CAD..1.2362

USD Plunges on Data

The dollar plunged in Thursday trading, falling to its lowest level in nearly 2-months against the euro at 1.3405 and yen at 91.15. Prompting the steep sell-off in the greenback was a set of dismal US economic reports – which included weekly jobless claims and the trade balance figure. The weekly jobless claims report unexpectedly surged to its highest level in 26-years at 573k, worst than the 525k forecasted and sharply higher from the previous week at 509k. Meanwhile, the October trade deficit ballooned to $57.19 billion versus calls for an improvement to $53.5 billion from $56.47 billion in September.

Safe haven flows jumped into spot gold, pushing it to a two-month high at $833 per barrel. Meanwhile, US equities struggled across the board with the Dow Jones slumping by 2.24%, the Nasdaq sliding 3.68% and the S&P 500 losing 2.85%.

The US economic calendar on Friday will be closely scrutinized with traders looking at November retail sales, PPI and the December University of Michigan consumer confidence survey. The headline November retail sales is expected to improve to -1.9% from -2.8% from October, while the excluding autos figure is seen improving to -1.7% from -2.2% a month earlier. The November PPI is expected to decline by 2.0%, compared with a 2.8% decline a month earlier. The University of Michigan consumer confidence index is seen drifting slightly lower in December to 55.0 from 55.3 a month earlier.
 
Euro Rallies to 2-month High

The euro jumped to its highest level in two months against the greenback above the 1.34-level. ECB Board member Weber tempered expectations for further aggressive policy easing from the Central Bank, saying “if the benchmark rate sinks below 2% when medium to long-term inflation expectations are just below 7%, that implies negative interest rates”, which he expressed as wanting to avoid.

Eurozone economic data due out later in the session include Q3 labor cost and October industrial production.

EURUSD has relinquished its earlier gains, drifting to 1.3315 with support seen at 1.33, followed by 1.3270 and 1.3230. Subsequent floors are eyed at 1.32, backed by 1.3160 and 1.3120. On the upside, interim resistance starts at 1.3360, backed by 1.34 and 1.3440. Additional gains will target 1.3470, backed by 1.35 and 1.3540.

Published on  Sun, Dec 14 2008, 22:22 GMT

Euro Edges Higher on ZEW

Wed, Dec 10 2008, 22:20 GMT
by Korman Tam

Forexnews.com

12/9/2008 7:15 PM: EUR/$..1.2946 $/JPY..92.42 GBP/$..1.4774 $/CHF..1.2044 AUD/$..0.6577 $/CAD..1.2595

Euro Edges Higher on ZEW

The dollar continued to slide against the euro, easing to 1.30 despite better than expected housing data. Pending home sales in October unexpectedly beat consensus estimates at -0.7% versus -4.6% a month earlier. Nonetheless, despite the better than forecast report, the housing market has yet to bottom out and will continue to weigh on economic fundamentals.

US equities also relinquished some of yesterday’s gains with a 2.72% decline in the Dow Jones and 1.55% drop in the Nasdaq. Fed funds futures are currently pricing in a 65% probability that the FOMC will cut rates by 75-basis points at its meeting next week to 0.25%.
 
BoC Slashes 75-bp

The Loonie drifted lower against the greenback in the Tuesday session following the results of the Bank of Canada’s monetary policy announcement. The BoC cut rates by larger than expected with a 75-basis point rate cut to its lowest level in 50-years at 1.5%. The accompanying statement from the BoC offered a gloomy outlook, saying Canada’s economy “is now entering a recession as a result of the weakness in global economic activity”. Further, it said “the outlook for the world economy has deteriorated significantly and the global recession will be broader and deeper than previously anticipated”.

USDCAD holds steady near 1.2660, with interim resistance seen at 1.27, backed by 1.2750 and 1.2780. Additional gains will target ceilings at 1.28, followed by 1.2840 and 1.2860. On the downside, support starts at 1.2560, backed by 1.2530 and 1.25. Subsequent support will emerge at 1.2440, followed by 1.24 and 1.2360.

Euro Extends Gains

The euro touched the 1.30-level against the dollar in the New York afternoon. Germany’s ZEW sentiment survey was unexpectedly better than forecast, with the economic sentiment improving in December to -45.2 versus -53.5 a month earlier and besting calls for further deterioration to -55. The current conditions component fell by more than expected to -64.5 from -60.0 in November. ZEW President Franz said the report suggests that the Germany economy “is slipping deeper into recession”. However, the ZEW also said that “the slight improvement of the ZEW indicator signals that the worries about further aggravation of the recession in the middle of 2009 seem to be limited”.

EURUSD hovers above the 1.29-level with interim resistance seen at 1.2940, followed by 1.2970 and 1.30. Subsequent ceilings are seen at 1.3030, followed by 1.3060 and 1.31. On the downside, support starts at 1.29, followed by 1.2860 and 1.2840. Additional floors will emerge at 1.28 and 1.2750.

Published on  Wed, Dec 10 2008, 22:20 GMT

USD & JPY Buoyed on Safe Haven Flows

Mon, Dec 8 2008, 22:14 GMT
by Korman Tam

Forexnews.com

12/7/2008 6:30 PM: EUR/$..1.2727 $/JPY..92.70 GBP/$..1.4700 $/CHF..1.2185 AUD/$..0.6469 $/CAD..1.2738

USD & JPY Buoyed on Safe Haven Flows

The dollar and yen kick off the week on stronger footing against the majors as heightened risk aversion has triggered a flight to safety amid rapidly deteriorating global economic fundamentals. The greenback continues to hover near 6 ½-year highs versus the sterling at 1.4730 and remains buoyed against the euro around the 1.27-level. Despite last week’s dismal US jobs data – which saw nonfarm payrolls plunge by its largest level since 1974 with a loss of 533k jobs and the unemployment rate jump to its highest since 1993 at 6.7%, markets expect economic fundamentals overseas to deteriorate at a greater pace than in the US.

Last week’s unprecedented scope of rate cuts by the ECB, BoE and RBA highlight the current dire economic outlook and suggest further policy easing may be in the offing to stimulate their ailing economies. On Tuesday, the Bank of Canada is set to announce the results of its policy deliberation at 9:00 AM in which markets are looking for a 50-basis point rate cut to 1.75% from 2.25%. Meanwhile, the SNB is expected to policy unchanged when it releases its decision early Thursday morning.

In the coming week, the US economic calendar consists of October pending home sales, trade balance, weekly jobless claims, November PPI, retail sales, University of Michigan consumer confidence survey and October business inventories. With the labor market at its worst levels in decades, consumer spending will likely continue to struggle over the coming months – exacerbating the current US economic recession. The November retail sales figures are seen reflecting soft consumer demand despite the holiday shopping season with the headline retail sales figure slumping by 1.9%, albeit improving from October at -2.8%. The excluding autos retail sales figure is estimated to fall by 1.7% compared with a 2.2% decline in the previous month. The University of Michigan consumer confidence survey is seen drifting lower to 55.0 in December, compared with a 55.3 reading a month prior.

We look for the greenback and yen to continue to extend gains, particularly against the battered sterling. Cable holds steady near the 1.47-level in the early Asian session. Support starts at 1.4660, followed by 1.4620 and 1.46. Subsequent floors will emerge at 1.4570, followed by 1.4540 and 1.45. On the upside, resistance is seen at 1.4740, backed by 1.4760 and 1.48. Additional ceilings are eyed at 1.4830, followed by 1.4860 and 1.49.

Published on  Mon, Dec 8 2008, 22:14 GMT

USD, JPY Drift Lower, RBA Cuts

Tue, Dec 2 2008, 22:15 GMT
by Korman Tam

Forexnews.com

12/2/2008 7:00 PM: EUR/$..1.2692 $/JPY..93.07 GBP/$..1.4866 $/CHF..1.2072 AUD/$..0.6433 $/CAD..1.2502

USD, JPY Drift Lower, RBA Cuts 100-bp

The dollar relinquished ground against the majors, slipping to 1.2765 versus the euro and near the 0.65-handle against the Aussie. Crude oil extended its losses amid decelerating demand as a result of the sharp slowdown in global economic growth, dropping to its lowest level in 3 ½ years to $46.82. Global equity bourses rebounded in the Tuesday session, prompting currency traders to jump back into higher-yielding currencies and sending both the greenback and the yen lower.

The Bank of Japan held an emergency policy meeting, leaving policy unchanged but moved to further alleviate tightening credit conditions, announcing it would broaden the range of collateral to accept for up to 3-months. With the BoJ’s benchmark lending rate hovering near zero, the Bank continues to explore alternative methods to jumpstart the economy.

The key highlights for the remainder of the week will be the policy decisions from the ECB and the BoE, as well as the labor report from the US on Friday. Both the ECB and BoE are anticipated to cut rates aggressively near the end of the week, with markets expecting 50-basis point rate cuts. We look for the greenback to remain buoyed heading into the end of the year and expect the recent strength in the euro and Aussie to be short-lived.
 
Aussie Edges Higher Despite 100-bp Cut

The Aussie rallied against the greenback, climbing just shy of the 0.65-level despite an aggressive rate cut by the Reserve Bank of Australia overnight. The RBA slashed its benchmark lending rate by 100-basis points to 4.25%, its lowest level in 6 ½-years. In the accompanying statement from Bank Governor Stevens, he said recent data point toward a significant moderation in demand and will likely result in falling inflation. Stevens added, in conjunction with “the spending measures announced by the Government, and a large fall in the Australian dollar exchange rate, significant policy stimulus will be supporting demand over the year ahead”.

AUDUSD continues to consolidate above the 0.64-level with interim resistance seen at 0.6460, followed by 0.65 and 0.6530. Subsequent ceilings will emerge at 0.6560, backed by 0.66 and 0.6620. On the downside, support begins at 0.64, followed by 0.6370 and 0.6330. Additional floors are eyed at 0.63, followed by 0.6250 and 0.62.

Published on  Tue, Dec 2 2008, 22:15 GMT

Greenback Slips Amid Soft Data

Tue, Nov 25 2008, 22:11 GMT
by Korman Tam

Forexnews.com

11/25/2008 3:00 pm: EUR/$..1.3036 $/JPY..95.55 GBP/$..1.5442 $/CHF..1.1862 AUD/$..0.6477 $/CAD..1.2266

Greenback Slips Amid Soft Data

The dollar extended loses against the majors in the Tuesday session, slumping to 1.3080 versus the euro and just shy of the 1.54-figure against the sterling. Dragging the greenback lower was a barrage of negative US data.

The US economic reports released earlier today were largely gloomy, with the decline in Q3 GDP largely in line with expectations – down 0.5% versus a 0.3% decline previously. The Q3 GDP sales fell by more than anticipated, lower by 1.4% from 0.8% while PCE prices were up by 5.2% versus 5.4%. The Case-Shiller home price survey plunged further with the monthly price index dropping by 1.8% in September versus a 1.0% decline a month earlier and on an annualized basis, down by 17.4% from 16.6% previously. The Richmond Fed index deteriorated further to -22 from -10, while the composite index slipped to -38 from -26. On a positive note, the Conference Board’s consumer confidence survey improved to 44.9 in November from a month earlier at 38.8, with sentiment improving on declining oil prices. The expectations component improved to 46.7 from
35.7 in October, while the present situation index drifted lower to 42.2 versus 43.5 previously.

Given the holiday-shortened week, the calendar for Wednesday will see a barrage of data including October personal consumption, core PCE, durable goods orders, weekly jobless claims, personal income, Chicago PMI, University of Michigan consumer sentiment, new home sales, and the NY NAPM index.

The Fed announced further steps to stem the crisis in the financial system, pledging up to $800 billion in an effort to free up the tight credit markets. The latest pledge is to facilitate lending to small businesses, students and homebuyers. With the Fed funds rate creeping near zero, the Fed is utilizing alternate measures to unfreeze the credit markets and ease the strains from a lock-up in credit.

Published on  Tue, Nov 25 2008, 22:11 GMT

USD Retreats

Mon, Nov 24 2008, 22:13 GMT
by Korman Tam

Forexnews.com

11/24/2008 3:30 PM: EUR/$..1.2912 $/JPY..96.91 GBP/$..1.5138 $/CHF..1.1962 AUD/$..0.6514 $/CAD..1.2303

USD Retreats

The greenback fell against the majors at the start of the week, tumbling just shy of the 1.29-level against the euro and dropping toward 1.5176 versus the sterling. The US equity market extended Friday’s gains with the Dow Jones up by over 3.6% and the Nasdaq advancing by more than 4% by afternoon trading amid a bailout plan to inject $20 billion into Citigroup and guarantee over $300 billion in toxic assets.

The housing market continues to struggle with existing home sales in October posting a 3.1% decline to 4.98 million units, down from 5.18 million units a month earlier. Several key reports are due out on Tuesday including Q3 preliminary GDP, Q3 PCE, September Case-Shiller home prices, November consumer confidence, and the Richmond Fed survey. The US economy is estimated to have contracted by 0.5% in Q3 while the Conference Board’s consumer confidence survey is estimated to slip to 37.9.

Euro Rallies, Shrugs off Dismal Data

Economic conditions in the Eurozone remain bleak with data from Germany revealing further deterioration. Germany’s October Ifo sentiment survey plunged by more than expected to its lowest level in nearly 16-years at 85.8 versus calls for a slide to 88.7 from 90.2 a month earlier. The expectations component tumbled to 77.6 from 81.4 while the current conditions index fell to 94.8 from 99.9 a month earlier. The drop in the Ifo sentiment survey was its sixth consecutive monthly decline and underscores the dour outlook for the Eurozone’s largest economy. Ifo President Sinn said, “The economic downturn has hardened and will now also affect the labor market”. With Germany’s economy already in recession, the latest data raises fears of a deep and prolonged recession and will likely prompt the ECB to ease rates aggressively at the coming meetings.

Traders will look ahead to Germany’s Q3 GDP data, due out early Tuesday. EURUSD is steady above the 1.29-figure with interim resistance seen at 1.2940, followed by 1.2970 and 1.30. Subsequent ceilings are eyed at 1.3050 and 1.31. On the downside, support begins at 1.29, followed by 1.2870 and 1.2830. Additional floors are seen at 1.28, backed by 1.2760 and 1.2730.

Published on  Mon, Nov 24 2008, 22:13 GMT

USD Recovers from Overnight Selling

Sun, Nov 23 2008, 22:19 GMT
by Korman Tam

Forexnews.com

11/21/2008 3:10 PM: EUR/$..1.2540 $/JPY..95.74 GBP/$..1.4798 $/CHF..1.2229 AUD/$..0.6239 $/CAD..1.2820

USD Recovers from Overnight Selling by Korman Tam

The greenback fell sharply against the majors early in the Friday session before regaining its footing by the New York afternoon. The dollar briefly fell to 1.5059 against the sterling and 1.2636 versus the euro. Trading in the foreign exchange market remained choppy and volatile, benefiting the Japanese yen amid heightened risk aversion. US equity bourses recovered from earlier session losses to hover near flat by afternoon trading while crude oil remained mired beneath $50 per barrel.

Chicago Fed President Evans reiterated the Fed would take all appropriate actions on the economy, adding that financial conditions could not be called accommodating now. He warned that the current economic climate was very serious and that monetary conditions were not enough to curtail the rise in the unemployment rate. Evans said that monetary policy can only do so much more and said bringing the Fed funds rate to zero would be a complicated issue.

There was no economic data from the US released today. The calendar for next week consists of Q3 preliminary GDP, personal consumption, November consumer confidence, personal spending, PCE, and durable goods orders.

Given the deterioration in global economic fundamentals and heightened fears for recession, we anticipate further gains in the dollar and yen over the coming weeks as traders continue to shift funds away from the euro and sterling. Further, economic data from the Eurozone and UK raise prospects for a deep and prolonged recession with both respective central banks still not acting as aggressively as the Fed.

Published on  Sun, Nov 23 2008, 22:19 GMT

USD Recovers Footing

Wed, Nov 19 2008, 22:12 GMT
by Korman Tam

Forexnews.com

11/19/2008 2:22 PM: EUR/$..1.2574 $/JPY..96.14 GBP/$..1.5030 $/CHF..1.2100 AUD/$..0.6474 $/CAD..1.2465

USD Recovers Footing

The major currencies whipsawed in the Tuesday session, with the greenback recovering from earlier losses in New York trading. The dollar tumbled to lows against the euro and sterling at 1.2813 and 1.5248, respectively, before recovering by the afternoon session.

US economic reports released earlier in the session continue to confirm the dire conditions facing the economy. The consumer price index dropped by 1% in October, larger than expectations for a 0.8% decline from a flat reading in the previous month, marking its steepest decline on record. The headline annual CPI figure eased to 3.7%, down from 4.9% a year earlier. The core CPI figure also posted a 0.1% decline versus an increase of 0.1% in September and down to 2.2% from 2.5% in the previous year. The record declines in consumer prices again raises fears of deflation and highlights the quandary the FOMC currently finds itself in. Meanwhile, October housing starts posting a 4.5% decline compared with the 6.3% decline in September to 791k units and building permits plunged by 12% to 708k units.

The FOMC minutes from the October meeting revealed that economic developments could “force more rate cuts and review of liquidity facility adequacy”. The Fed said even after the 50-basis point rate cut, downside risks to growth remain and some officials acknowledged deflation risk posing a challenge as a result of the low Fed funds rate. The outlook in the minutes was largely bleak with the expectations for restrained growth in 2009 as a result of persistent credit market strains and housing woes. The FOMC also expects gloomy figures for 2009 with unemployment seen climbing to 7.1-7.6%, and GDP growth ranging from -0.2-1.1%. We anticipate a 50-basis point rate cut by the FOMC when it next meets to deliberate monetary policy on December 16th.

The calendar for Wednesday consists of weekly jobless claims, seen easing to 505k from 516k, October leading indicators – estimated to post a 0.6% decline from 0.3% in September and the November Philadelphia Fed survey, forecast to improve to -35.0 from -37.5.

Published on  Wed, Nov 19 2008, 22:12 GMT

Japan Falls into Recession, USD Eases

Mon, Nov 17 2008, 22:19 GMT
by Korman Tam

Forexnews.com

11/17/2008 3:45 PM: EUR/$..1.2674 $/JPY..96.72 GBP/$..1.5028 $/CHF..1.1975 AUD/$..0.6542 $/CAD..1.2219

Japan Falls into Recession, USD Eases by Korman Tam

The dollar relinquished earlier strength against the euro and sterling -- falling from 1.2514 to near 1.2740 and tumbling from 1.4649 to 1.5081, respectively. Economic data from the US was mixed with the New York Fed manufacturing survey plunging to a record low in November at -25.43 compared with -24.62 a month earlier. The employment index plunged to -28.92 deteriorating from -3.66 from October while the new orders index dropped to a record low at -22.21 versus -20.45. Further, the Fed survey revealed 38% of respondents reported tightening credit in November, up from 25% previously.

Meanwhile, October industrial production unexpectedly improved by more than forecast, up 1.3% compared with a revised -3.7% from September. The October capacity utilization improved to 76.4% from 75.5% a month earlier. The drop in September industrial output was the largest since 1946 at -5.0%, while the rise in October industrial output was the largest since 1999 at 1.3%.

The calendar for Tuesday consists of October producer prices, net TIC flows and the November NAHB housing market index. On Wednesday, the data slated for release include October CPI, leading indicators, housing starts, and building permits.
 
JPY Eases as Japan Slips into Recession

The yen fell across the board, falling to the 125-level against the euro and the 146-region versus the sterling. Data revealed Japan slipping into its first economic recession since 2001 with Q3 GDP declining by 0.1%, after declining by 0.9% in Q2. Japan’s economics minister Yosano sounded a pessimistic tone saying “economic conditions could worsen as the US and European financial crisis deepens, worries of an economic downturn heighten and stock and foreign exchange markets make big swings”.

USDJPY holds steady around 96.75, with interim resistance eyed at 97, backed by 97.40 and 97.80. Additional ceilings are seen at 98, followed by 98.30 and 98.65. On the downside, support begins at 96.60, backed by 96.20 and 96. Subsequent floors will emerge at 95.50, followed by 95 and 94.80.

Published on  Mon, Nov 17 2008, 22:19 GMT

FOMC Cuts by 50−bp, Signals Further Easing

Wed, Oct 29 2008, 22:38 GMT
by Korman Tam

Forexnews.com

10/29/2008 3:25 PM: EUR/$..1.2920 $/JPY..97.70 GBP/$..1.6370 $/CHF..1.1361 AUD/$..0.6731 $/CAD..1.2162

FOMC Cuts by 50-bp, Signals Further Easing 

The Federal Reserve cut its benchmark lending rate by 50-basis points to 1% by unanimous vote and also lowered its discount rate by 50-basis points to 1.25%. The currency markets were heavily pricing in the aggressive move with the greenback tumbling against the euro and sterling heading into the decision. The dollar fell by over 700-pips versus the pound from 1.5765 to 1.6473 while dropping from 1.2583 to 1.2990 against the euro.

In the accompanying FOMC policy statement, the Fed delivered a somber assessment of the economy saying “the pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures”. The statement also paved the way for additional policy easing at the next meeting in December, revealing expectations for inflation to continue to moderate over the coming quarters. The Fed said “the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit”. Accordingly, we look for the FOMC to slash rates again in December with a 25-basis point cut bring the year-end benchmark lending rate to 0.75%.

The economic reports released earlier in the session saw headline durable goods orders for September rise by 0.8% reversing from a steep 4.8% decline a month earlier. The excluding transportations figure improved to -1.1% from -3.3% previously. Several key reports are slated for release in the Thursday session, with weekly jobless claims, Q3 advanced GDP, and Q3 core PCE. Weekly jobless claims are seen largely unchanged at 475k, from 478k a week earlier. The advanced Q3 GDP reading is estimated to post a 0.5% decline compared with a 2.8 gain previously.

Published on  Wed, Oct 29 2008, 22:38 GMT

Yen tanks amid Global Equity Rally

Tue, Oct 28 2008, 22:39 GMT
by Korman Tam

Forexnews.com

10/28/2008 2:50 PM: EUR/$..1.2591 $/JPY..97.44 GBP/$..1.5746 $/CHF..1.1591 AUD/$..0.6363 $/CAD..1.2952

Yen tanks amid Global Equity Rally 

A rebound in the global equity bourses prompted traders to dump the yen across the board. The Japanese currency sold-off sharply from 114.42 against the euro to 122.57 and tumbled to 153.40 from 142.90 versus the sterling. Meanwhile, the greenback was initially higher versus the euro and sterling, hovering near its one-year highs around the 1.24 and 1.55 levels, respectively.

The Conference Board’s October consumer confidence index plunged to a record low at 38.0, sharply missing consensus estimates for a decline to 59.8 from a revised 61.4 from September. The present situation component sank to its lowest level since 1992 at 41.9, posting a steep drop from a month earlier at 61.1. The Case-Shiller home price survey fell by 1.0% in August versus the 0.9% decline in the previous month and posted a steeper 16.6% drop compared from a year earlier at 16.3%. Meanwhile, the Richmond Fed manufacturing survey deteriorated to -26 in October, versus -18 a month earlier. However, the services index improved to -10, up from -15 from the previous month.

The sharp declines in consumer confidence further support calls for a 50-basis point rate cut when the FOMC announces its policy decision tomorrow afternoon. The results for the Fed’s two-day meeting will be released on Tuesday at 2:15pm. We anticipate the FOMC to deliver a 50-basis rate cut, lowering its benchmark lending rate to 1.0%. The accompanying statement will likely emphasize further downside risks to growth and pave the way to another 25-basis point rate cut at its December 16th meeting to 0.75%.

Published on  Tue, Oct 28 2008, 22:39 GMT

JPY Rallies on Safe Haven Flows

Fri, Oct 24 2008, 06:28 GMT
by Korman Tam

Forexnews.com

10/23/2008 3:00 PM: EUR/$..1.2853 $/JPY..96.44 GBP/$..1.6118 $/CHF..1.1602 AUD/$..0.6560 $/CAD..1.2585

JPY Rallies on Safe Haven Flows

Burgeoning fears of a potentially severe global economic recession continued to prop the dollar and yen higher amid sentiment that the ECB and BoE will need to aggressively ease policy to stimulate their economies. Safe haven flows propped the greenback to 1.2729 versus the euro and 1.6046 against the sterling, while the yen surged to 123.17 to the euro and 154.61 versus the pound. Global equity bourses extended recent losses, with the Dow Jones and Nasdaq trading under heightened volatility and whipsawing by the afternoon session.

Weekly jobless claims released earlier in the session unexpectedly crept higher, edging up to 478k, versus 461k in the previous week. On Friday, the data slated for release include September existing home sales, which seen up slight at 4.93 million units.

 
Recession Fears Weigh on Sterling

The sterling found no reprieve in the Thursday session, with traders sending the currency sharply lower to fresh multi-year lows against the dollar and yen at 1.6046 and 155.33, respectively. Economic reports from the UK point toward continued deterioration in fundamentals, underscoring sentiment that the economy may be dipping into a recession. September retail sales slumped by 0.4%, versus an increase of 1.2% a month earlier and slipped to 1.8%, down sharply from 3.3% in the previous year.

In the coming session, Q3 growth rates will be closely scrutinized with consensus estimates calling for GDP to contract by 0.2% from a flat reading in the previous quarter while posting annualized growth of 0.5%, declining from 1.5% in Q2.

Cable recovered above the 1.61-level in afternoon trading, with resistance seen at 1.6170, followed by 1.62 and 1.6230. Subsequent ceilings will likely emerge at 1.6260, backed by 1.63 and 1.6340. On the downside, support starts at 1.6125, followed by 1.61 and 1.6040. Additional floors will emerge at 1.60 and 1.5970.

Published on  Fri, Oct 24 2008, 06:28 GMT

Fed's Bernanke Tips Hat to Rate Cut

Wed, Oct 8 2008, 23:56 GMT
by Korman Tam

Forexnews.com

10/7/2008 9:50 PM: EUR/$..1.3582 $/JPY..101.20 GBP/$..1.7508 $/CHF..1.1403 AUD/$..0.7070 $/CAD..1.1037

Fed’s Bernanke Tips Hat to Rate Cut

The global financial crisis continues to drive the volatile movements in the foreign exchange market, with the yen and dollar benefiting from safe haven flows amid heightened risk aversion. The US equity bourses extended its dive for another session with the Dow Jones losing 5.1% to 9,447.11, the Nasdaq plunged 5.8% to 1,754.88 and the S&P 500 shredding another 5.74% to break beneath the 1,000-level to 996.23. Amid growing speculation of coordinated intervention by global central banks, Fed Chairman Bernanke raised the prospects for a rate cut suggesting the FOMC would “need to consider whether the current stance of policy remains appropriate” given the current “extraordinary stress” on the financial system. It was also revealed earlier that the Fed would be purchasing commercial paper issues to facilitate the improved flow of credit with Bernanke saying they will continue to pursue tools at its disposal to improve market functioning and liquidity.

Meanwhile, fears overseas have heavily weighed on the sterling and euro – amid burgeoning skepticism over the stability of European and British financial institutions. It was announced earlier today the UK would inject up to 50 billion pounds into several banks, with the government purchasing preferred shares of the banks – thus partially nationalizing the institutions. Governments across the globe have stepped up efforts to inject liquidity into cash-strapped financial institutions in order to stave off further tightening in the credit markets and stem the crisis.

The minutes of the FOMC’s September 16th meeting revealed deliberations for a rate cut, with Board members expressing greater pessimism over growth in the coming year. The minutes showed some members calling for a “policy response” to the detrimental impact of the financial crisis on growth. With the next Fed policy meeting at the end of October, we look for a 50-basis point rate cut from the FOMC, lowering its benchmark lending rate to 1.50%.

In the coming session, the economic reports slated for release include the ECB monthly report, Eurozone GDP and US pending home sales.

Published on  Wed, Oct 8 2008, 23:56 GMT

USD Edges Higher

Wed, Oct 1 2008, 22:38 GMT
by Korman Tam

Forexnews.com

10/1/2008 3:50 PM: EUR/$..1.4014 $/JPY..106.07 GBP/$..1.7708 $/CHF..1.1254 AUD/$..0.7881 $/CAD..1.0621

USD Edges Higher

The dollar extended gains against the euro and sterling in the Wednesday session amid heightened demand for greenbacks as a result of tight credit conditions in the market. Trading will remain choppy in the coming days as markets eagerly anticipate the successful passage
of the Administration's $700 billion rescue plan. The Senate is scheduled to vote on a bailout plan this evening, with the House also likely to vote by week's end.

The market continues to shrug off weak US economic reports, instead focusing on the government's ability to successully navigate through the financial turmoil and limit the scope for a deep and prolonged recession. The September manufacturing ISM fell to it's lowest level since October 2001 at 43.5 versus 49.9 in August, dipping further beneath the key 50-level that distinguishes between expansion and contraction.

 
Euro Struggles

The euro remains mired near the 1.40-region versus the dollar, largely attributed to recent questions over the stability of European financial institutions. Further, Eurozone data have deteriorated as a result of the global economic slowdown prompting calls for the ECB to cut its benchmark lending rate to stimulate the economy.

The ECB is largely expected to leave interest rates unchanged at 2.25% when it announces its decision on Thursday morning. The subsequent press conference from Bank President Trichet will unlikely offer any new insight into the ECB’s policy direction over the coming months with the offsetting risks of deteriorating economic fundaments and lingering inflationary pressure.

Published on  Wed, Oct 1 2008, 22:38 GMT

USD Soars on Rescue Plan Hopes

Wed, Oct 1 2008, 00:23 GMT
by Korman Tam

Forexnews.com

9/30/2008 6:55 PM: EUR/$..1.4096 $/JPY..106.08 GBP/$..1.7820 $/CHF..1.1209 AUD/$..0.7928 $/CAD..1.0634

USD Soars on Rescue Plan Hopes

The greenback surged on Tuesday, advancing by over 6-big figures against the euro from 1.4616 to 1.4008 while climbing by nearly 4-big figures versus the sterling from 1.8143 to a 2-week low at 1.7757. US equity bourses also rebound sharply on Tuesday following yesterday’s session of record declines. The Dow Jones reversed some of Monday’s losses, recovering by 4.68% while the Nasdaq and S&P 500 also rallied, up by 4.97% and 5.27%, respectively. The dollar benefited from growing optimism that a rescue plan to bail out the ailing banking sector will be passed as early as Thursday. In contrast, financial news from Europe continues to bode poorly for the euro amid burgeoning fears that European banks may also be teetering on the brink.

The markets largely ignored the economic reports released today, instead continuing to focus on the likelihood a financial rescue bill will be passed by week’s end. Housing data revealed further declines with the July Case-Shiller home price index falling by 0.9% versus a 0.5% decline a month earlier while the annualized decline edged up to 16.3% versus a 15.9% decline previously. Despite the sharp deterioration in economic fundamentals and increased financial turmoil, the Conference Board’s September consumer confidence survey improved by more than expected, jumping to 59.8 from 56.9 and posting its third consecutive monthly improvement. Meanwhile, the Chicago manufacturing PMI report declined by less that expected, easing in September to 56.7 from 57.9 a month earlier.

 
Euro Tanks

The euro posted its steepest single day drop against the dollar in New York trading, plunging by over 600-pips to 1.4008 on a combination of optimism that a bailout plan will be passed and heightened fears that European banks remain under pressure. Fresh revelations this week of capital injections into European Banks, Dexia and Fortis, have raised concerns over the solvency of European financial institutions.

EURUSD trades near 1.4090, with support starting at 1.4050 backed by 1.4020 and 1.40. Additional floors will emerge at 1.3970, followed by 1.3940 and 1.39. On the upside, resistance emerges at 1.41, backed by 1.4130 and 1.4175. Subsequent ceilings are seen at 1.42, followed by 1.4240 and 1.4280.

Published on  Wed, Oct 1 2008, 00:23 GMT

Congress Rejects Rescue Plan; Equities & USD Selloff

Mon, Sep 29 2008, 23:55 GMT
by Korman Tam

Forexnews.com

9/29/2008 5:40 PM: EUR/$..1.4417 $/JPY..104.00 GBP/$..1.8050 $/CHF..1.0896 AUD/$..0.8001 $/CAD..1.0457

Congress Rejects Rescue Plan; Equities & USD Selloff

The dollar’s fortunes reversed sharply, falling from near the 107-level against the yen to plunge to the 104-handle after it was announced that the House of Representatives voted against the $700 billion bailout plan by a vote of 228 to 205. The failure to pass the Administration’s plan to purchase toxic assets off banks’ balance sheets was incredibly disappointing to markets and heightens uncertainty over the outlook for the financial sector and raises the risk for the economy to plunge into a prolonged recession. US equity bourses succumbed to panic selling falling to multi-year lows, with the Dow Jones posting steep losses of 6.71% while both the Nasdaq and S&P500 plunged by over 9.14% and 8.49%, respectively. According to Congressional staffers, the earliest date for another vote to take place will be on Thursday.

US Treasury Secretary Paulson said there has been significant turmoil in the financial markets in recent days but remains committed to continue to work with regulators to protect both the financial system and economy. Paulson said the banking system was holding up very well considering the pressure, adding that he will continue to work with lawmakers as the effort to stabilize the banking system was too important to fail. He also expressed a sense of urgency, saying in spite of the “significant tools in the Treasury’s tool kit”, they are insufficient in bailing out the financial sector.

Global central banks continued to pump liquidity into the financial system with another bout of coordinated intervention. The Fed announced that it would be injecting another $630 billion in an effort to prevent the credit markets from locking up. In coordination with the ECB, BoE, BoJ and SNB, the Fed will bolster its swap lines to facilitate liquidity to flow more freely.

Trading in the foreign exchange market will continue to be dictated over the coming days by the deliberations in Congress and whether a plan will be passed by the end of the week. Moreover, Friday will see the September jobs report with consensus estimates calling for the unemployment rate to remain unchanged at 6.1% while non-farm payrolls are seen posting another loss of 85k jobs compared with a loss of 84k in August.

Published on  Mon, Sep 29 2008, 23:55 GMT

Markets Await Results of Bailout Plan

Sun, Sep 28 2008, 22:49 GMT
by Korman Tam

Forexnews.com

9/25/2008 10:55 PM: EUR/$..1.4671 $/JPY..105.90 GBP/$..1.8433 $/CHF..1.0834 AUD/$..0.8361 $/CAD..1.0329

Markets Await Results of Bailout Plan

The greenback continues to trade on weak footing against the majors, mired beneath the 106-level versus the yen and trading near 1.4675 against the euro as the Bush Administration¡¯s $700 billion bailout plan encountered gridlock in Congress. Amid the ongoing financial turmoil, markets will pay close attention to the results of the Congressional deliberations on the rescue plan in the coming days.

Further increasing the selling pressure on the dollar was earlier reports of the largest bank failure in US history, when it was announced that the assets of Washington Mutual was seized by the government on grounds that it had ¡°insufficient liquidity¡±. JP Morgan Chase agreed to acquire Washington Mutual¡¯s $1.9 billion in deposits. Chairman of the FDIC, Sheila Bair expressed concerns of the potential impact of WAMU failure on the deposit insurance fund, and conducted the transaction on earlier this evening as a result of media leaks. However, Bair believes the number of future failures will be low in contrast to the Savings and Loans crisis.

Reports from the US reinforced the dire state of the economy, with new home sales down sharply by 11.5% to 460k units versus 515k units previously ¨C its worst level in 17-years. Durable goods orders also fell sharply; posting a 4.5% decline compared with a 1.3% increase a month earlier while the core durable goods orders declined by 3.0% versus a 0.7% increase from July. Meanwhile, weekly jobless claims spiked up to 493k, versus 455k a week prior.

Traders will look ahead to reports slated for release on Friday, including Q2 GDP, and the September University of Michigan consumer sentiment survey. Consensus estimates expect growth to remain unchanged in the second quarter, steady at 3.3%, while the GDP deflator is seen easing to 1.2% from 1.3%. The September University of Michigan consumer confidence survey is seen improving from 63.0 in August to 70.5 in September.

Published on  Sun, Sep 28 2008, 22:49 GMT

Dollar Eases Ahead of Data

Thu, Sep 25 2008, 21:29 GMT
by Korman Tam

Forexnews.com

9/24/2008 10:50 PM: EUR/$..1.4718 $/JPY..105.84 GBP/$..1.8566 $/CHF..1.0836 AUD/$..0.8400 $/CAD..1.0353

Dollar Eases Ahead of Data

The dollar extended losses against the majors in the early Thursday session, falling near the 1.47-level against the euro and relinquishing the 106-handle versus the yen. As Congress continues to scrutinize the $700 billion bailout plan proposed to calm the turmoil inflicting financial markets, traders remained concern about whether such a plan will be successful in staving off further rapid deterioration in economic fundamentals. Earlier in the session, President Bush warned that not passing the rescue plan would cost Americans much more in the long run given widespread loss of confidence and the current risk of major sectors of the financial system at risk of shutting down, ultimately resulting in a “long and painful recession”. He struck a somber tone, saying “without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold”.

Fed Chairman Bernanke offered a similar assessment when he testified to Congress on Wednesday, saying further delay in passing the plan would result in severely impacting “the overall performance of the US economy, perhaps over a period of years”. He added that “the intensification of financial stress in recent weeks, which will make leaders still more cautious about extending credit to households and business, could prove a significant drag on growth”. Nonetheless, despite the sense of urgency imparted by President Bush, Treasury Secretary Paulson and Fed Chairman Bernanke; lawmakers expressed skepticism over the staggering burden on taxpayers and questioned whether the bailout would be successful.

US economic reports return to focus in the session ahead, with markets focusing on August durable goods, initial jobless claims, and new home sales. The headline durable goods orders for August are seen reversing July’s 1.3% gain, falling by 1.6% while the excluding transportation figure is seen falling by 0.5% compared with an increase of 0.7% in the previous month. Meanwhile, August new home sales are seen little changed from the prior month, down slightly to 510k units, versus 515k units from July.

EURUSD hovers above the 1.47-region, with interim resistance eyed at 1.4730, followed by 1.4760 and 1.48. Subsequent ceilings are seen at 1.4840, backed by 1.4875 and 1.49. On the downside, support will emerge at 1.47, followed by 1.4650 and 1.46. Additional floors are seen at 1.4570, backed by 1.4530 and 1.45.

Published on  Thu, Sep 25 2008, 21:29 GMT

USD Plunges Amid Wavering Confidence

Tue, Sep 23 2008, 22:54 GMT
by Korman Tam

Forexnews.com

9/22/2008 11:00 pm: EUR/$..1.4779 $/JPY..105.21 GBP/$..1.8550 $/CHF..1.0759 AUD/$..0.8405 $/CAD..1.0332

USD Plunges Amid Wavering Confidence

The dollar sold off sharply against the majors at the start of the week amid a sharp run-up in crude oil prices and steep declines in the US equity bourses. Oil posted its largest single day advance, rallying by $16.37 to $120.92 per barrel, which was largely attributed to the expiration of October contracts. The US equity markets sold-off sharply as confidence in the government’s bailout plan and ability to steer the financial sector away from the current crisis wavered, sending the Dow Jones lower by 3.27% and the Nasdaq losing 4.17%. The greenback plunged by nearly 4-big figures against the euro from 1.4436 to above the 1.48-level while losing over 3-big figures versus the sterling from 1.8262 to 1.8588.

Uncertainty over the US government’s $700 billion rescue plan to purchase bad mortgage debts off banks’ balance sheets has triggered heightened volatility in the financial markets and raised fears on whether it will solve the current crisis. The plan is still pending Congressional approval, with additional details possibly not revealed until next week. The dollar will likely continue to bear the brunt of the sharp volatility and concerns of a potentially sharp spike in the deficit. Spot gold continues to trade above $900 per ounce, while crude oil was up by over $25 per barrel in the previous session.

EURUSD trades near the 1.48-level, with interim resistance eyed at 1.4820, followed by 1.4865 and 1.49. Additional gains are seen at 1.4930, backed by 1.4960 and 1.50. On the downside, support will emerge at 1.4750, followed by 1.47 and 1.4660. Subsequent floors are seen at 1.4630, backed by 1.46 and 1.4550.

In the coming session, economic reports slated for release include Germany’s September PMI, Eurozone July industrial new orders, Canada CPI, and the US Richmond Fed manufacturing survey.

Published on  Tue, Sep 23 2008, 22:54 GMT

USD Rebounds on Govt Action

Sun, Sep 21 2008, 21:26 GMT
by Korman Tam

Forexnews.com

9/18/2008 11:00 PM: EUR/$..1.4222 $/JPY..106.74 GBP/$..1.8054 $/CHF..1.1156 AUD/$..0.8064 $/CAD..1.0634

USD Rebounds on Govt Action

The dollar edged higher in early Friday trading, rising above the 106-figure versus the yen and pushing the euro lower toward the 1.42-region. A relief rally in US equity bourses reversed earlier losses, with the Dow Jones Industrial Average closing the Thursday session 3.86% higher and the Nasdaq up by 4.78%. The advance in the greenback and stocks was prompted by discussions for the creation of a government-sponsored entity that would remove “the illiquid assets on bank balance sheets that are the underlying source of the current stresses in financial institutions and financial markets”. In doing so, the government aims to restore confidence in the recently battered financial industry following the string of failures and halt any additional fallout on the already slumping economy.

Global central banks announced coordinated efforts to pump massive amounts of liquidity into the financial system to alleviate “continued elevated pressures in the US dollar short-term funding markets”. The BoC, BoE, ECB, SNB, BoJ and Federal Reserve increased their swap lines to provide improved liquidity in both term and overnight operations by more than $180 billion.

The US economic reports released on Thursday included weekly jobless claims, which jumped to 455k from 445k in the previous week, the August leading indicators and the September Philadelphia Fed survey. The August leading indicators index came in at -0.5%, improving from -0.7% from July while the Philadelphia Fed business survey unexpectedly increased to 3.8 versus -12.7 in August. There are no data releases slated for the Friday session with market movements largely dictated by any new revelations over the government’s ongoing efforts to resolve the current crisis and turmoil in the financial markets.

We expect the current volatility to continue over the coming weeks as the stability of US banks remain closely scrutinized and lingering questions of which financial institution is next to fall. Further, we look for crude oil to continue to decline amid fears that the series of failures by US financial institutions will have widespread affects on the global economy and temper demand for energy. Our near-term outlook for crude oil is for continued decline toward the $85 per barrel level.

Published on  Sun, Sep 21 2008, 21:26 GMT

Possible AIG Bailout Calms Market

Wed, Sep 17 2008, 21:15 GMT
by Korman Tam

Forexnews.com

9/16/2008 9:50 PM: EUR/$..1.4189 $/JPY..106.36 GBP/$..1.7870 $/CHF..1.1212 AUD/$..0.8031 $/CAD..1.0672

Possible AIG Bailout Calms Market

The dollar regained its footing against the majors in New York trading following a volatile session of sharp movements– recovering above the 106-handle against the yen and moving back toward the 1.41-region versus the euro. Fears of an impending collapse of insurance giant AIG were tempered amid speculation of a government bailout with rumors for a potential $85-$90 billion bridge loan being extended by the Federal Reserve. The US equity bourses also recouped some of Monday’s sharp losses, with the DJIA edging higher by 1.3% and the Nasdaq up by 1.28%.

The FOMC left interest rates unchanged at 2.0% when it announced its monetary policy decision on Tuesday afternoon, revealing a unanimous vote to stand pat. Although Fed acknowledged that “strains in financial markets have increased significantly and labor markets have weakened further”, it stuck to its mantra that “the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth”. The FOMC maintained its neutral outlook citing lingering inflation with a highly uncertain outlook.

The economic reports released saw August CPI ease somewhat, with the headline CPI figure posting a 0.1% drop versus an increase of 0.8% in the previous month and lower at 5..4% compared with 5.6% a year earlier. The core CPI figures declined as well, easing to 0.2% from 0.3% in the previous month and unchanged on an annualized basis at 2.5%. Meanwhile, the July overall TIC flows posted a $74.8 billion net outflow compared with a $51.1 billion inflow from June.

On Wednesday traders will digest housing reports from the US including August building permits, housing starts as well as the current account deficit for Q2. Housing starts are estimated to decline slightly to 960k, down from 965k from July while building permits are seen slipping to 930k from 937k a month earlier. The August current account deficit is expected to increase to $179.4 billion, up from $176.4 billion a month earlier.

Published on  Wed, Sep 17 2008, 21:15 GMT

Market Turmoil Sends JPY Soaring

Tue, Sep 16 2008, 21:38 GMT
by Korman Tam

Forexnews.com

9/15/2008 10:00 pm: EUR/$..1.4226 $/JPY..104.24 GBP/$..1.7944 $/CHF..1.1128 AUD/$..0.7896 $/CAD..1.0700

Market Turmoil Sends JPY Soaring

Heightened risk aversion dominated the markets at the start of the week amid a fresh bout of turmoil in the financial sector. The combination of Lehman Brothers filing for Chapter 11 bankruptcy, Merrill Lynch being acquired by Bank of America and fears of AIG teetering near the brink sent ripples through the major equity bourses with the Dow Jones plummeting by 4.42%, the Nasdaq lower by 3.6% and the S&P 500 plunging by 4.71%. The yen advanced sharply across the board as traders unwound risky positions, rallying toward the 104-level against the dollar and advancing to the 186-region versus the sterling.

Earlier in the session, credit rating agency S&P’s cut the long-term rating for AIG from AA- to A-, citing a “combination of reduced flexibility in meeting additional collateral needs and concerns over increasing residential mortgage-related losses”.

A barrage of US economic reports is slated for release on Tuesday, including August real earnings, CPI, net Treasury capital flows, and the September NAHB housing market index. The key highlight for tomorrow will be the FOMC’s monetary policy decision, due out at 2:15pm. Prior to the events this week, the Fed was largely expected to leave rates unchanged at 2.0%. However, given the failure of Lehman Brothers and burgeoning fears of a domino effect on Wall Street as the malaise spreads under the increased scrutiny of counterparty risk, the Fed may be compelled to slash rates by 25-bp tomorrow to 1.75%. With crude oil retreating beneath the $100 per barrel level to a new 7-month low at $95.11, the easing of inflationary pressure will provide the FOMC with more leeway to stimulate the struggling economy with additional policy easing.

In the coming session, traders will digest inflation reports from both the UK and Eurozone, offering markets a glimpse of whether rate cuts from both respective central banks may be imminent. The UK August CPI figures are seen sharply higher, up 0.5% versus a flat reading in the previous month while edging up to 4.6% from 4.4% a year earlier. Also slated for release overnight will be Germany’s September ZEW survey, with economic sentiment at -54.0 from -55.5 while the current situation index is seen deteriorating further to -15.0 from -9.2.

Published on  Tue, Sep 16 2008, 21:38 GMT

Global Growth Slowdown Spark USD, JPY

Thu, Sep 11 2008, 23:06 GMT
by Korman Tam

Forexnews.com

9/11/2008 3:19 PM: EUR/$..1.3938 $/JPY..106.82 GBP/$..1.7510 $/CHF..1.1407 AUD/$..0.7987 $/CAD..1.0778

Global Growth Slowdown Spark USD, JPY

The key gainers in the currency market for the Wednesday session were the yen and dollar, both advancing sharply amid heightened risk aversion over mounting fears for a global recessionary environment. Crude oil also slumped, falling to its lowest level in 8-months at $100.32 per barrel as traders continue to anticipate a slowdown in demand in the near-term, prompted by deterioration in global economic fundamentals.

The economic reports earlier in the session saw a larger than anticipated US trade deficit, which burgeoned to its highest level since March 2007. Consensus estimates were expecting the July trade deficit to increase to $58.0 billion from $56.77 billion previously, instead the deficit swelled to $62.2 billion for July versus an upwardly revised $58.84 billion deficit in the month prior. The exports component hit a record, up 3.3% to $168.15 billion compared with $162.79 billion from June, while imports also expanded to record levels, increasing by 3.9% to $230.35 billion versus $221.65 billion. The July oil import price was up 6.4% to a record $124.66 per barrel. With oil retreating sharply from the record levels in July, we look for the deficit to pull back somewhat over the coming months. Also released were weekly jobless claims, which edged up marginally to 445k from 444k a week earlier.

The dollar surged to a near one-year high against the euro at 1.3881 and a fresh 2 ½-year high versus the pound at 1.7443. Lingering fears over the scope for a recession to hit the UK in the coming months continue to drag the sterling lower. The catalyst for the sell-off was comments from BoE Board Member Blanchflower, who expressed fears that job losses may triple amid a larger than expected decline in the UK economy. Meanwhile, traders shrugged off comments from BoE Governor King, suggesting interest rates may remain on hold in the interim. King, speaking before the Treasury Committee, said that while the growth outlook had deteriorated, inflation had also increased, potentially sparking further increases in wages.

US data slated for release on Friday include August PPI, retail sales and the September University of Michigan consumer sentiment survey. The headline PPI reading is seen declining by 0.5%, versus a 1.2% increase in the previous month while core PPI is estimated to ease to 0.2% from 0.7% from June. Retail sales are expected to slip to 0.2% for August, reversing a 0.1% decline from the previous month. The excluding-autos reading for retail sales are seen posting a 0.2% drop versus a 0.4% increase from June. Lastly, the preliminary University of Michigan consumer sentiment survey is forecast to improve to 64.0 from 63.0.

Published on  Thu, Sep 11 2008, 23:06 GMT

USD Edges Higher, Oil Retreats

Wed, Sep 10 2008, 23:14 GMT
by Korman Tam

Forexnews.com

9/10/2008 3:30 PM: EUR/$..1.4040 $/JPY..107.71 GBP/$..1.7558 $/CHF..1.1336 AUD/$..0.8037 $/CAD..1.0690

USD Edges Higher, Oil Retreats

The dollar touched a fresh 11-month high against the euro just above the 1.40-level and held steady near 2 ½-year highs versus the pound at 1.7540. The greenback continues to remain favored amid burgeoning fears of rapidly deteriorating economic fundamentals, which consequently sent crude oil to an intra-day low at $101.43 per barrel. Also propping the dollar higher was the announcement from Lehman Brothers to sell off parts of its business to shore up its balance sheet, thereby tempering market jitters in the interim.

Traders will look ahead to US economic reports slated for release Thursday morning, consisting of the July trade deficit, weekly jobless claims and the August Federal Budget. Consensus estimates expect the trade deficit to edge higher to $58 billion in July, versus a $56.77 billion deficit from the previous month. Weekly jobless claims are seen little changed at 440k versus 444k from the prior week. Meanwhile, the Federal Budget is forecasted to shrink to $106.2 billion for August, compared with $117.0 billion a month earlier.

 
Euro Dips to New Lows

The euro’s woes extended into the Wednesday session, slumping to a new 13-month low versus the yen at 150.18 and a fresh 11-month low against the dollar at 1.4014. Comments from Eurozone officials reinforced lingering fears of further deterioration in economic fundamentals, with Luxembourg Prime Minister Juncker warning that he “can see risks of technical recession” given the Q2 growth figures, reflecting two consecutive quarters of negative GDP. He added that inflation might have reached its peak in July while the slowdown will likely be more drawn out than initially anticipated.

ECB President Trichet expects to have “a gradual recovery over the coming years after the present depressed episode”. He added that the “fall of oil prices from their peak in July will help to strengthen disposable income”, suggesting the Eurozone economy may be nearing a bottom. Trichet also anticipates that the current interest rate stance will contribute to a return to price stability during 2010.

EURUSD holds steady around 1.4040, with support starting at 1.40, backed by 1.3970 and 1.3940. Additional floors will emerge at 1.39, backed by 1.3850 and 1.38. Meanwhile, gains will target interim resistance at 1.4060, followed by 1.41 and 1.4130. Subsequent ceilings are seen at 1.4165, backed by 1.42 and 1.4250.

Published on  Wed, Sep 10 2008, 23:14 GMT

USD Supported by Bailout Plan

Mon, Sep 8 2008, 23:34 GMT
by Korman Tam

Forexnews.com

9/8/2008 2:30 PM: EUR/$..1.4097 $/JPY..107.97 GBP/$..1.7524 $/CHF..1.1326 AUD/$..0.8117 $/CAD..1.0685

USD Supported by Bailout Plan

The greenback was bolstered by the US government¡¯s decision to bail out Fannie Mae and Freddie Mac, announced Sunday by US Treasury Secretary Hank Paulson, sending the dollar to its highest level since October 2007 against the euro at 1.4059. Paulson said that ¡°Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe¡±. The intervention comes amid burgeoning fears that the mortgage lenders would default, sending ripples throughout the financial system and exacerbating an already sluggish economy. Traders overseas lauded the bailout, sending the Nikkei index higher by almost 3.4%, the FTSE-100 up by nearly 4% while yields on US Treasuries rose higher as well.

US economic reports due out in the Tuesday session include July pending home sales, seen declining by 1.1% in July from a 5.3% increase in the previous month and July wholesale inventories. Key data highlights for the coming week include July trade balance, August retail sales, PPI, the University of Michigan consumer confidence survey and July business inventories.

 
Euro tumbles

The euro sank to its lowest level in almost a year against the dollar at 1.4055 amid fresh strength in the greenback due to a combination of lingering fears the Eurozone economy may slip into recession and news of the government led bailout of Fannie Mae and Freddie Mac.

The Eurozone economic calendar is light this week, with Germany¡¯s trade balance due out early Tuesday and E-15 July industrial production. Also due out this week will be the ECB monthly economic report, which is likely to reveal a downgraded assessment for the economy while reiterating the current inflationary outlook.

EURUSD will find support at 1.4050, backed by 1.40 and 1.3970. Subsequent floors will emerge at 1.3940, followed by 1.39 and 1.3860. On the topside, gains will target interim resistance at 1.41, followed by 1.4260 and 1.43. Additional gains will target 1.4340, followed by 1.4370 and 1.44.

Published on  Mon, Sep 8 2008, 23:34 GMT

Yen Rallies, Traders Await Jobs

Sun, Sep 7 2008, 14:33 GMT
by Korman Tam

Forexnews.com

9/4/2008 10:58 PM: EUR/$..1.4273 $/JPY..106.95 GBP/$..1.7562 $/CHF..1.1117 AUD/$..0.8182 $/CAD..1.0676

Yen Rallies, Traders Await Jobs

The yen rallied sharply across the board, advancing to 186.20 against the sterling, 150.59 versus the euro and 105.71 to the dollar. With global equity bourses posting sharp losses, traders scaled back carry trades as a result of the heightened risk aversion. Meanwhile, the greenback jumped to its highest level since October 2007 against the euro at 1.4213 and a fresh 2 ½-year high versus the pound at 1.7562.

The key highlight in the Friday session will be the US labor report for August, with consensus estimates calling for a loss of 75k jobs in non-farm payrolls versus a loss of 51k jobs from July. The unemployment rate is seen remaining unchanged at 5.7% while average earnings are also expected to hold steady at 0.3%.

Although US economic fundamentals continue to deteriorate it remains to be seen when a shift toward an easing stance by the FOMC will materialize given the current inflationary outlook. Dallas Fed President Fisher expressed concerns over inflation, saying “it is pretty clear that trend consumer price inflation has accelerated over the past few months”. Further, he added that “while it seems pretty clear that economic momentum is slowing, the jury is out on whether lesser momentum will be sufficient to translate into the relief on the price front over the intermediate to longer term”. Fisher expects the economy will “suffer anemic growth for the current and perhaps next couple of quarters”. We expect the Fed to leave rates unchanged over the remainder of the year, and foresee a shift toward interest rate cuts in Q1 2009.

The sterling and euro continue to come under renewed selling pressure amid burgeoning fears that both the