- USD:Lower, IMF says USD still on the strong side, G-20 pledged to maintain stimulus, low Fed yields
- JPY: Higher, Japan tops China as biggest buyer of US debt, reserves rise to a new record
- EUR: Higher, EU Sentix rises, German exports surge, strong German industrial output
- CHF: Higher, unemployment at 11 year high, consumer prices fall, rising risk of intervention
- GBP: Mixed, supported by improving risk appetite
- CAD and AUD: AUD &CAD higher, tracking stocks, risk appetite, higher crude and record price of gold
Overview
USD traded sharply lower Monday pressured by a number of factors which included, stronger global equity markets, a pledge by the G-20 to continue with stimulus and a statement from the IMF that the USD is overvalued. The USD was also pressured by G-20 silence on USD decline. Speculation that the Fed will maintain low yields for an extended period coupled with the G-20 pledge to not withdraw stimulus until the global recovery is secure fueled demand for equities and sparked an improvement in risk appetite. The Feds Bullard said that a strong recovery is needed before the Fed tightens policy. His comments coupled with Friday’s report that US unemployment rate is above 10% will encourage the Fed to maintain low yields. The USD has emerged as the global funding currency because of low US yields. The IMF says that the USD is the global funding currency and despite recent weakness may still be overvalued. EUR traded above 1.5000 supported by strong EU industrial output data and rising German exports. Commodity currencies traded higher supported by improving risk appetite, higher crude prices and a new record high in the price of gold. Risk sentiment and the direction of equity marketsremain the main market drivers for the Forex trade.
