FOREX TRADING

Asian markets were firmer today after a lackluster performance in US equities. Concerns about debt laden Greece continue to weigh heavily on the euro while commodity currencies continue to gain on improving global economic outlook. Crude oil continued to climb, testing 17 month highs at $87-per barrel with gold bettering $1137.00 late in the Tokyo session. Copper prices hit levels not seen since August of 2008, topping $7990.00-per metric ton. The loonie and the aussie continued their assault on the dollar with the loonie breaking parity to .9983 at market open in London. (more…)

USD Mixed, JPY Weakens, Commodity Currencies Rally

• USD: Mixed, ADP employment falls more than expected, non-manufacturing ISM confirms expansion
• JPY: Lower, pressured by political and fiscal uncertainty as Japan’s finance minister resigns, carry trade
• EUR: Higher, ECB’s Stark says EU may not bail Greece out of its deficit problems, services PMI and PPI rise
• GBP: Higher, consumer confidence unexpectedly drops, shop prices rise at fastest rate in 13 months
• CAD and AUD: AUD & CAD higher, Australia reports strong building approvals and vehicle sales

Overview

USD traded mixed Wednesday gaining versus the JPY and European currencies and weakening versus the commodity currencies. JPY experienced significant volatility and traded lower in reaction to report that Japan’s Finance Minister Fujii has resigned because of health concerns. His resignation generates uncertainty about Japan’s fiscal outlook. JPY has recently weakened pressured by concern about a possible downgrade of Japan’s sovereign debt rating if Japan does not reduce its deficit. EUR traded lower in reaction to a statement from the ECB’s Stark that the EU may not bail Greece out of its deficit problems. EU downside was limited by report of improving EU service PMI and an uptick in EU inflation. GBP was pressured by report of an unexpected decline in UK consumer confidence which posted its sharpest monthly drop for the year. (more…)

The dollar was mixed on Friday, sharply lower versus the yen but modestly higher against the commodity currencies. US consumer confidence rose more than expected, boosted by the recent rally on Wall Street. Wholesale inventories fell for a record eleventh straight month while wholesale sales gained, indicating a US economic recovery in on track. The S&P 500 fell 1.41 points to 1,042.73, the first decline in six days. The USD/JPY plunged following the penetration of the 91.50 support. The euro was flat. Sterling rose modestly, supported by higher UK producer-price inflation. The Australian and Canadian dollars declined as commodity prices fell despite China’s better-than-expected industrial production.

The dollar index fell for a sixth consecutive day, the longest loosing streak since the beginning of the stock market rally in March. Despite weakness in US stock market prices, the dollar index declined 0.13 points to 76.69 today, approaching the 76-area support. Stocks are overbought and usually weak in September/October, and the dollar usually appreciates during the same time. We believe there is a good chance that the dollar may find support despite strong downward momentum and solidly negative sentiment. (more…)

Big Day Economically In The UK Trading Bank Of England Interest Rate Decision
Cable opened Thursday in Asia at 1.6545 and has been trapped in a narrow 1.6525/1.6560 range ever since, with the market generally happy to sit on its hands ahead of tonight’s BOE MPC rate statement. JPY crosses were bid early on residual momentum from a positive night on Wall Street giving the risk appetite a boost, and buying for the Tokyo fix, with GBP/JPY opening on its lows at 152.15 and reaching a high of 152.60 before drifting lower postfix, currently 152.32.

EUR/GBP has been quiet so far, opening at 0.8801 and trading a narrow 0.8796/0.8805 range. A big day economically in the UK today with the release of interest rate statement, the Bank of England is widely expected to hold the benchmark interest rate at 0.50% and is likely to maintain its GBP 175B.

The EUR/USD opened the Asian session at 1.4560 after trading to 1.4605 during the US session when the USD fell sharply across the board on stops. The EUR/USD traded up to 1.4565/70 in early Asia on EUR/JPY buying out of Tokyo and a rumour that some of the EUR/USD buyers in recent days have been flows related to the recent purchase by China of 50 BLN USD worth of SDR-denominated IMF bonds. (more…)

Forex trading to today are set to be driven by a batch of data from both the U.S. and Britain. The main release from the U.S. today that traders are waiting for is the Consumer Spending, also known as the Personal Spending report from the U.S. at 12:30 GMT. Estimates put the figure at approximately 0.2% in July, about half the increase of June. Nevertheless, the arise is mainly owed to the cash-for-clunkers program. In spite of this, a positive figure may actually hurt the USD, as such a result could increase risk appetite. Consequently, in order to take advantage of end-of-week market behavior, open your positions in the USD, EUR, and GBP now.

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Today’s U.S. Consumer Confidence data release is set to dominate the trading between the Dollar and its major currency pairs. A number of other factors are also likely to impact the forex market today, such as the British BBA Mortgage Approvals at 8:30 GMT. The results of today’s data are likely to determine the USD’s trend going into rest of the week’s trading. (more…)

In the same vein as Monday’s and Tuesday’s posts (covering the New Zealand Dollar and Australian Dollar, respectively), I’d like to use today’s post to look at another commodity currency – the Canadian Dollar. The Loonie, it turns out, has also benefited from the a recovery in risk appetite and concomitant boom in commodity prices; it has appreciated by 7% against the USD in the last month alone, en route to a ten-month high. “All in all, with almost everything going its way these days (besides the crummy weather and the impact on tourism), a return trip to parity – last visited nearly one year ago – doesn’t seem far fetched,” chimes one optimistic analyst.

Like Australia and New Zealand, (more…)