• Home ::
• Technical ::
• Forex Strategy ::
• Daily Forex Commentary

• Send
• Print
• Add To
• Rss

Daily Forex Commentary

2981e2b2-419c-4a63-86d9-747cd1de97e6

0

0

The USD remains under pressure

Tue, Sep 23 2008, 06:45 GMT
by Jyske Bank Team

Jyske Bank

Today’s comment

Majors & Scandies

By the Majors & Scandis Team

Currently market participants have their attention directed firmly towards the unprecedented plan aimed at bailing out the financial sector in the US and prevent further devastating blows to the financial markets which in turn could have fatal consequences for the trembling US economy. So far it looks as though American tax payers will be picking up a bill amounting to a breathtaking 700 bn USD (at least) and as focus has turned towards the deteriorating outlook for the national budgets the USD has weakened dramatically from recent highs. In the short term we expect pressure on the US dollar will sustain. Hence a test of 148.80 on EURUSD doesn’t seem unlikely. However as the dust settles we expect that focus among investors once again will turn towards the deteriorating outlook for growth in the Euro Zone. Thus we don’t believe that the recent developments in EURUSD is a sign that we are about to take leave of the long term downtrend which has been established in recent months. Hence in the long term we stick to our 3-month target in EURUSD at 137.00 (corresponding to 544 in USDDKK)

Following the recent drop in the USD USDCAD and NZDUSD have broken out the trading intervals we have defined for the currency crosses. As we believe that the downside potential on the USD is fairly limited in the short term we have chosen to maintain a neutral stance and adjust our intervals.

There are several interesting events in the macro economic calendar today. However there is little doubt that Treasury Secretary Paulson and Fed’s Bernanke will steal the limelight as they take the stage to testify on the current credit turmoil before the Senate panel.

Emerging Markets

By the Emerging Markets Team

In general we had a quiet European session yesterday. However when the US market opened global risk appetite declined and the global equity markets ended the day much lower (Dow Jones: - 3.27 %). The same happened to EM-currencies in general. Worst performer of the day was ISK, which dropped with almost 4 per cent from the top of the day. TRY declined with 1.7 % against EUR. Following the euphoria on the markets Friday, now the investors maybe have started to look at the fundamental problems in the US-economy (increasing unemployment and lower growth – add to that now: a large fiscal burden to help the banks out of their misery). As a consequence the US-dollar once again showed weakness and dropped 2 % against the Euro.
This put pressure on MXN, but BRL could hold out and ended the day almost unchanged against the Euro. Today we expect pressure on EM-currencies in the European session and look forward to new input, when the US market opens.

Today’s Key Events

• 10:00 Euro Zone PMI manufacturing (EUR)

• 10:00 Euro Zone PMI service (EUR)

• 10 :00 ECB’s Liikanen speaks (EUR)

• 11 :00 New industrial orders (EUR)

• 11 :00 Retail sales (ZAR)

• 11 :30 CPI (ZAR)

• 13 :00 CPI (CAD)

• 16 :00 Treasury Secretary Paulson and Fed’s Bernanke testify on credit turmoil at Senate panel (USD)

• Download Full Daily Forex Commentary

Published on  Tue, Sep 23 2008, 06:54 GMT