• Home ::
• Technical ::
• Market View ::
• Forex Daily Overview

• Send
• Print
• Add To
• Rss

Forex Daily Overview

b53a4f82-df1c-4d46-8efd-17c8ba24d1da

1

0

USD lower pressured by reassessment of US rate outlook

Tue, Jun 9 2009, 16:30 GMT
by Michael J. Malpede

Easy Forex

• USD: Lower, pressured by reassessment of US rate hike speculation, China may diversify away from USD
  
• JPY: Higher, supported by gains in cross trade to EUR, leading indicators rise
  
• EUR: Higher, German industrial output falls, IMF calls on EU to take action to support the financial system
  
• GBP: Higher, UK house prices improve, BRC retail sales decline, political turmoil eases
  
• CAD and AUD: AUD & CAD higher, crude prices /risk appetite rise, Flaherty says the economy is bottoming
  

Overview

With no major US economic data scheduled for release Tuesday the USD drifted lower pressured by a statement from the World Bank's Zoellick that China may diversify reserves away from the USD and a reassessment of the possibility that the Fed will raise interest rates. According to a Bloomberg report, speculators that expect US interest rates to head higher this year are wrong. The report surveyed 15 of the 16 primary dealers that deal directly with the Fed and the majority predict no US rate increase until at least the second half of 2010. In Monday's trade the USD was supported by speculation that improving US economic outlook would encourage the Fed to raise interest rates by year end. A number of analysts are warning that it's too early to be pricing a US rate hike as the global economic outlook remains uncertain. The job market, housing market and financial markets must show considerable improvement before the Fed hikes rates. Japan's finance minister said it's too early to tell if the global economy has bottomed and the IMF says that the EU economy remains weak and the EU must take urgent action to support EU financial system and come clean about EU bank losses. EUR edged higher despite an IMF report urging the EU to take action on banks and report of weak German industrial output. EUR was supported by report that Latvia will maintain its peg to the EUR. GBP was supported by improving UK house prices and easing UK political turmoil. CHF traded higher despite report that the Swiss KOF lowered its 2009 GDP forecast from -2.4% to -3.3% and said that the Swiss economy is in a long recession. Commodity currencies rallied supported by higher crude prices and firmer equity market trade. Canada's Flaherty says the Canadian economy is bottoming. Today's USD price action suggests that the recent USD rally was corrective and that the trade looks to sell USD on rallies.

Todays US data:

April wholesale trade falls 1.4%, a 1.1% decline was expected.

Upcoming US data:

On June 10th, April trade balance will be released expected at -29.00 bln compared to -27.5 bln last month. Also on June 10th, May Treasury budget will be released expected at -195 bln compared to -165.93 bln last month. On June 11th, initial jobless claims will be released for the week ending in 6/06 expected to fall to 610 K from 621K last week. May retail sales and business inventories will also be released on June 11th. Retail sales are expected to rise 0.3% compared to 0.4% last month. Business inventories are expected at -0.8% compared to -1% last month. On June 12th, June University of Michigan consumer sentiment is due for release expected at 70 compared to 68.7 last month.

• Download full Forex Daily Overview with charts

Published on  Tue, Jun 9 2009, 16:33 GMT