FOREX TRADING

USD Sharply Lower, IMF Says USD Still Overvalued

FX Highlights

• The USD is trading lower to start the week pressured by stronger equity markets, in reaction to the G-20 meeting and by a statement from the IMF about the USD, the G-20 was silent on USD weakness and pledged to continue to support the global economy, the IMF says that USD is still being used as a funding currency and may be overvalued, EUR supported by strong industrial output data and widening of German trade surplus, commodity currencies supported by another record rise in the price of gold and higher price of crude, the Fed is expected to maintain low yields as worse than expected US unemployment threatens the US recovery
• Focus turns to today’s release of Canada’s housing starts
• Japan’s October foreign reserves rise to a record 1.05trln, Japan’s finance minister says Japan should stop relying so much on exports, JPY higher
• Australia’s October job ads fall 1.7%, housing finance for September rises 5.1%, AUD higher
• ECB’s Bini-Smaghi expects strong EU economic rebound in the last two quarters of 2009 ,EU November Sentix index improves to its best level since June 2008 at -7, German September industrial output rises 2.7%, German September trade surplus widened to 10.6bln as exports rise 3.8% EUR higher
• The G-20 pledge to continue stimulus boosts demand for equities and risk appetite
• IMF says the USD is now the funding currency and is still overvalued as concerns about financial imbalances are forming
• Feds Bullard says strong recovery needed before tightening, outlook for inflation uncertain
• Zillow says US home prices are stabilizing, fewer mortgages underwater
• IMF warns the G-20 to not cut stimulus to quickly because the recovery is uneven, fragile and largely dependent on government support
• US equity markets set to open higher, European equities1.5% higher, Nikkei closed 20 points higher

Upcoming Events

• US - Monday, no major economic reports are due for release today
• CAN - Monday, October housing starts will be released expected at 155k compared to 150.1k last month

By Michael J. Malpede

Easy Forex

Michael J. Malpede is Chief Market Analyst with Easy-Forex® and has previously been featured on Bloomberg TV, Bloomberg radio, Reuters, MarketWatch, Wall Street Journal, Chicago Tribune, Chicago Sun Times, Toronto Star and Nikkei press. In analyzing the markets, he draws from 29 years of Foreign Exchange Research as a Foreign Exchange Analyst.

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