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FX Weekly

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Relief for the Dollar?..

Thu, Oct 8 2009, 16:16 GMT
by Alpari (US) Analyst team

Alpari (US), LLC

Market Focus

Starting the week off was the German CPI (m/m), which came out at -0.4% vs. the expected -0.2%.  A bad number to be sure, hurting gains made by the EUR in the previous week. What made things noticeably worse for the EUR was the comments made by ECB President Trichet later on in the day.  His statements calling for a stronger dollar on the global front was a deal breaker that sent the EUR sharply lower during the session and mostly lower for the week. The GBP was also under pressure as the current account widened from -7.7B to 11.4B. Positive GBP themes were an increase in net lending to individuals, up .7B from the forecast .3B and higher than expected CBI realized sales. Commodity currencies and high yielders continue to hold their ground against the greenback due to higher energy prices and an unlikely chance of a rate hike in the US in the near term. Further gains for the Oz could be in the works next week as the RBA makes their rate announcement. In the US, home sales were a definitive positive for the USD, coming in at 6.4% (0.9% exp).  As good as the pending home sales number was, Friday’s nonfarm payrolls report was extremely weak. The -263k rise in unemployment was far worse than the -175k loss expected by analysts. The job market is at its worst since the start of the recession, and this NFP shows that pickings are going to get even slimmer.  With that said the markets initial reaction to the news was a broad based dollar sell off. However, when the fog cleared it was the greenback that carried the day, gaining against every currency aside from USDCAD.  In Asia, Japanese exporters continue to pay for the strong yen that is well below their assumed average of 94.50 yen. The pain inflicted on the repatriation of profits from oversees affects profits in a serious manner and will no doubt continue to contribute to a sluggish recovery in the export orientated economy.  

Published on  Thu, Oct 8 2009, 16:18 GMT