Welcome to Varengold’s Daily FX Report. Yesterday Fed chairman Ben Bernanke gave something to hang on their hopes, saying the recession might end in summer 2009. However we wish you a nice day.
Market review
The USD gained for the third day against the JPY after President Barack Obama expressed optimism that the U.S. will emerge from its recession “stronger than before.” Obama said also that “the credit crisis paralyzing the banking system must be fixed or our recovery will be choked off before it even begins.” Federal Reserve Chairman Ben S. Bernanke told lawmakers yesterday that the government would use supervision instead of shareholder control to guide major banks and warned against dismantling their franchises. The USD climbed more than 3 percent to 97.33 from 94.26 against the JPY, after it broke its 94.80 resistance line.
Japans economy, which is the world’s second largest, shrank at an annual 12.7% pace in the last quarter, which is the fastest since 1974. There could be further losses in the JPY after a survey said Japan’s trade deficit will be widened to 1.2 trillion JPY in January. In order of this the JPY lost 0.75% against the CHF after falling over 200 pips yesterday. Also against the CAD the JPY lost 0.63% after falling over 4% this week. The JPY was the best performer in 2008 among over 170 currencies, after it rose 23% against the USD and 29% against the EUR as the financial markets collapsed worldwide. The JPY fell 6.9% against the USD so far this year even as global stock markets extended losses.
EUR/GBP
Since the 11th of February the EUR/GBP has been trading in a bearish trend channel. After the pair crossed the 0.8770 support line, it pulled back and touched the upper line of the channel. Now the market seems to be on the way towards the 0.8770 support and the lower line of the channel again.
CHF/JPY
Since the end of October the CHF/JPY is moving inside a lot of support and resistance lines. As you can see the market has already crossed the 82.00 resistance, after it pulled back from the 75.20 support level. Additionally the market started to rise aggressively as it broke the 80.00 resistance level. These movements could be a sign for further gains towards the 87.00 resistance.
