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Daily Analysis
The Dollar and the Yen rise as Bernanke talks of plan to fight inflation
Tue, Jul 21 2009, 12:20 GMT
by Benny Menashe
Finotec Group Inc. | View company's profile
| EUR/USD | USD/JPY | GBP/USD | USD/CHF | |
| 1.4360(S) | 94.95(M) | 1.6620(M) | 1.0940(M) | |
| Resistance | 1.4335(M) | 94.80(S) | 1.6560(M) | 1.0785(M) |
| 1.4250(M) | 94.40(M) | 1.6505(M) | 1.0725(M) | |
| 1.4180(M) | 93.75(M) | 1.6370(M) | 1.0635(M) | |
| Support | 1.4145(M) | 93.25(M) | 1.6320(M) | 1.0590(M) |
| 1.4095(M) | 92.70(M) | 1.6220(M) | 1.0485(M) |
The greenback and the Japanese Yen rose after Federal Reserve Chairman Ben S. Bernanke said the central bank will be able to stem inflation once it begins to raise interest rates. The Fed will maintain “accommodative policies” aimed at reviving the U.S. economy for an “extended period,” including holding its benchmark interest rate near zero, Bernanke wrote in the article. Yields indicate investors lowered their bets that inflation will increase. “A premature exit from the unorthodox monetary policy by central banks across the globe may drag down higher-yielding currencies,” said Akio Yoshino, chief economist in Tokyo at Societe Generale. “The strength of these currencies was partly liable to the inflow of excessive liquidity that global central banks have been generating.” The EUR/USD is currently trading at $1.4200 as of 8:31am, London Time.
The greenback may rise after a “reality check” on the outlook for global economic growth, according to UBS AG, the world’s second-largest currency trader. “We expect to see some modest dollar strength over the coming weeks as risk aversion makes a gradual comeback and the risk rally stalls, if not retreats,” UBS foreign-exchange analysts including London-based Gareth Berry wrote today in a note to clients. “A reality check on global growth expectations is overdue and, if and when it happens, the accompanying rise in risk aversion is likely to benefit the U.S. dollar,” Berry said in an e-mailed message. The GBP/USD is currently trading at $1.6460 as of 9:00am, London Time.
The yen lost about 1 percent on the euro on Monday when Tokyo markets were closed, touching its lowest in two weeks at 134.76 yen per euro. Currency market players have been watching stock markets and U.S. corporate earnings as a gauge of how quickly recovery may materialize and the S&P 500 hit an eight-month closing high on Monday, with shares buoyed after lender CIT Group was thrown a lifeline to avoid bankruptcy. The Bank of Japan has taken measures to shore up financial markets in the face of the global credit crunch and extended some steps at its most recent meeting in July. The USD/JPY is currently trading at 94.10 as of 9:05am, London Time.
Today's Economic Events
| Time | Event | Currency/Country | Period | Previous | Forecast | Significance | Actual |
| 21:00 | ABC News Consumer Confidence Index | United States | -51 | 4 | |||
| 13:00 | Interest Rate Decision | Canada | 0.25 | 2 | |||
| 8:30 | Public Sector Net Borrowing | JPY/UK | 19.9 | 16.1 | 4 | 13 | |
| 8:30 | Public Finances (PSNCR) | JPY/UK | 18.8 | 20.2 | 4 | 19 | |
| 7:00 | M3 Money Supply (Y-o-Y) | Switzerland | Yearly | 4.2 | 3 | ||
| 7:00 | Convenience Store Sales (Y-o-Y) | Japan | Yearly | 1 | 3 | ||
| 6:15 | Trade Balance | CHF/Switzerland | 2.01 | 1.87 | 2 | 1.57 | |
| 6:15 | Exports (M-o-M) | Switzerland | Monthly | -7.4 | 3 | ||
| 6:15 | Imports (M-o-M) | Switzerland | Monthly | -5.7 | 3 | ||
| 4:00 | PMI Manufacturing | Eurozone | 42.6 | 2 | |||
| 4:00 | PMI Services | Eurozone | 44.7 | 3 | |||
| 4:00 | PMI Composite | Eurozone | 44.6 | 2 | |||
| 3:00 | Credit Card Spending (Y-o-Y) | New Zealand | Yearly | -2.4 | 3 | ||
| 1:30 | New Motor Vehicle Sales (M-o-M) | Australia | Monthly | 5.4 | 3 | ||
| 1:30 | New Motor Vehicle Sales (Y-o-Y) | Australia | Yearly | -12.6 | 4 |
Published on Tue, Jul 21 2009, 12:26 GMT
Archive
- The British pound rises after public sector net borrowing data comes out
Published On Fri, Mar 19 2010, 12:38 GMT - Sterling rises as unemployment drops and inflation maybe on its way up
Published On Thu, Mar 18 2010, 11:59 GMT - The Dollar drops as the Fed keeps interest rates on hold
Published On Wed, Mar 17 2010, 12:18 GMT - Sterling rises but sentiment remains downward below $1.50
Published On Fri, Mar 12 2010, 12:34 GMT - Sterling falls as manufacturing production comes out worse than expected
Published On Thu, Mar 11 2010, 12:36 GMT
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FINOTEC Trading’s Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein.Related reports
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