Posts Tagged ‘technical outlook’
Forex Trading – USD Pares Gains as Consumer Confidence Rises
Wednesday, January 27th, 2010USD Pares Gains as Consumer Confidence Rises
- USD: Higher, spike in risk aversion as China’s tightens monetary policy, consumer confidence rises
- JPY: Higher, China to hike reserve ratios on two major banks, BOJ policy unchanged, cuts deflation forecast
- EUR: Lower, above forecast German IFO fails to boost demand
- GBP: Lower, UK GDP disappoints, UK crawls out of recession, Pimco’s Gross says avoid UK debt
- CAD and AUD: AUD & CAD lower, China’s reserve ratio hike discourages demand for high yield currencies
Overview
USD traded higher Tuesday supported by a spike in risk aversion as equity markets decline in reaction to report that China hiked reserve ratios on some of its banks. Tightening of monetary policy in China generates concern about the global recovery. GBP was pressured by a report of weaker than expected UK Q4 GDP.EUR traded lower despite report that German IFO came in above forecast. GBP and EUR were pressured by selling in cross trade to the JPY with JPY supported by safe haven flows as equity markets decline. JPY traded higher despite S&P lowering of Japans bond outlook to negative from stable. S&P placed Japan on negative watch due to concern about Japan’s rising debt load and lack of flexibility to deal with reducing the debt. Commodity currencies traded lower tracking the spike in risk aversion and weaker commodities with crude oil prices falling below $74 a barrel. There was limited reaction to report that Fed officials are considering adopting a new benchmark interest rate to replace the one used for the last two decades (Fed funds). According to a Bloomberg report Fed officials are considering interest on reserves as the new benchmark rate. Today’s US economic data was mixed with case Shiller home price index down and consumer confidence rising. USD came off its high after the consumer confidence report. Focus turns to Wednesday’s FOMC meeting and President Obama’s State of the Union address. (more…)
Forex Trading – USD Pares Losses
Tuesday, January 26th, 2010USD Pares Losses, Existing Home Sales Fall by 16.7%
- USD: Mixed, Bernanke expected to be confirmed for second term, US existing home sales fall sharply
- JPY: Lower, BOJ may be prepared to increase purchases of government debt and ease monetary policy
- EUR: Higher, Nowotny says ECB will use steady hand approach to withdraw liquidity
- CHF: Higher, Hildebrand says SNB to prevent excessive CHF appreciation
- GBP: Higher, BOE to keep its emergency asset purchase plan under review
- CAD and AUD: AUD & CAD higher, China pledge’s to maintain loose monetary policy
Overview
USD traded lower Monday pressured by speculation that Bernanke will be confirmed for a second term as Fed chairman and in reaction to weak US housing data. The Bernanke news helped to boost risk appetite and reduce safe haven demand for the USD and JPY. JPY was also pressured by BOJ ease speculation as Bloomberg reports that the BOJ may be willing to increase its purchase of bonds in an effort to boost the Japanese economy and contain JPY strength. EUR rallied supported by a statement from the ECB’s Nowotny that the ECB will implement a steady hand approach to withdraw liquidity and in reaction to report of good demand for today’s Greek bond auction. GBP edged higher supported by improving risk sentiment and short covering ahead of Tuesday’s release of UK advanced Q4 GDP. A statement from Chinese officials that monetary policy will remain loose generated demand for commodity currencies. Today’s US economic data was mixed with US existing home sales declining sharply and Dallas Fed manufacturing index posting improvement. The drop in US existing home sales partly reflects uncertainty about the US tax credit for first-time homebuyers. NABE survey says that businesses are expected to boost hiring and capital spending in the first half of the year as the economy posts slow recovery. The USD is expected to consolidate recent gains due to concern about the strength of the US recovery and the impact of new banking regulations proposed by President Barack Obama last week. Focus turns to this week’s BOJ and FOMC policy meetings, the president’s State of the Union address Wednesday and advanced Q4 GDP reports in the UK and US. (more…)
Fundamental Outlook – USD Gains Versus EUR, JPY Rallies on Weak US Retail Sales
Friday, January 15th, 2010USD Gains Versus EUR, JPY Rallies on Weak US Retail Sales
- USD: Mixed, jobless claims up, retail sales down, business inventories rise
- JPY: Higher, tracking risk sentiment, machinery orders fall sharply
- EUR: Lower, Trichet calls for strong USD, EU Greek bond spreads continue to widen
- GBP: Higher, Moody’s expressed confidence UK will tackle its deficit, BOE may pause its bond buy program
- CAD and AUD: AUD & CAD higher, Australia’s employment report beats expectations
Overview
USD traded mixed Thursday with the main focus on report of improving Australian employment growth and Fed policy outlook. AUD traded higher supported by report of better than expected Australian employment growth. Australia’s employment report helped to boost demand for Asian equities and risk appetite. Growth led currencies continue to outperform. The Fed’s Dudley said that short-term interest rates in the US may rise in six months or may not rise for as long as two more years depending on the strength of the recovery and employment outlook. The ECB left rate policy unchanged as expected and the EUR traded lower pressured by ongoing concern about sovereign debt risk in Greece. In the press conference following ECB policy meeting ECB President Trichet said current rates are appropriate, price developments are expected to be subdued, data suggest improvement in economic activity, EU economy to grow at a moderate pace in 2010, unemployment expected to rise somewhat further, risk to inflation outlook broadly balanced and the ECB will keep phasing out unneeded policy measures. (more…)
Forex Market Update – USD Rebounds on Dovish ECB Rumor, Weaker Commodities
Thursday, January 14th, 2010USD Rebounds on Dovish ECB Rumor, Weaker Commodities
- USD: Mixed, China’s reserve rate hike seen as minimal threat to global growth
- JPY: Lower, BOJ may succumb to government pressure to ease monetary policy further in 2010
- EUR: Higher, Greek finance minister says Greece will not need a bailout from the EU or IMF
- GBP: Higher, BOE Sentance says interest rates may have to rise this year, industrial production rises
- CAD and AUD: AUD & CAD higher, rebound in risk appetite as concern about China tightening fades
Overview
USD traded lower Wednesday pressured diminished fear that Tuesday’s tightening in China will derail the global recovery. Equity markets stabilized in the US and Europe which contributed to a slight improvement in risk appetite and a rewind of carry trades. The pace of the withdrawal of liquidity in China will be key to the outlook for growth and risk appetite. So far Chinese tightening has been limited. An official at China’s central bank said that monetary policy remains reasonably loose. His comments helped to dampen fears that China’s tightening will derail the global recovery. GBP was supported by BOE rate hike speculation. The BOE’s Sentance said that the central bank may have to increase interest rates this year. EUR was supported by Asian central bank demand and a pledge from Greek officials that they will take action on the deficit. Greece’s finance minister said that Greece will not need an IMF or EU bailout. Commodity currencies rebounded supported by stable equity market trade. JPY traded lower pressured by diminished risk aversion and BOJ ease speculation. JPY was supported Tuesday by safe haven demand and unwind of carry trades. Wednesday finds a modest rebound in carry trades as the impact of China’s tightening fades. There was limited reaction to a statement from the Fed’s Plosser that he sees the economy emerging from recession and the Fed may begin to tighten even with jobless rate high. Plosser said that he does not see inflation pressures presently but that keeping interest rates too low too long could lead to a burst of inflation or sow the seeds for the next crisis. Plosser is a policy hawk and his views may not be representative of the majority of the FOMC. USD rebounded midsession as commodity prices declined and reaction to a rumor that the ECB may signal a dovish policy bias at tomorrow’s meeting. (more…)
Forex Trading – China Tightening Pressures Commodity Currencies
Wednesday, January 13th, 2010China Tightening Pressures Commodity Currencies
- USD: Mixed, disappointing earnings at Alcoa, trade gap widens, China begins to curb lending
- JPY: Higher, supported by safe haven and repatriation flows
- EUR: Lower, pressured in cross trade to JPY and GBP, concern about global growth as China tightens
- GBP: Higher, trade deficit narrows as exports surged and Tories gain in election polls
- CAD and AUD: AUD & CAD lower, Australian housing finance declines, Canada posts a trade deficit
Overview
USD traded mixed Tuesday gaining on the commodity currencies and the EUR and weakening versus the JPY and GBP as investors digest news from China and risk aversion re-emerges. Global equity and commodity markets were pressured by report that China had tightened credit conditions. USD was initially supported in overseas by positive statements from a Chinese sovereign wealth fund official who said that the USD has hit bottom and the JPY will continue to fall. USD traded higher in reaction to these comments and JPY lower. China announced that it is raising its reserve requirements by 50bps. Stocks and commodity prices traded lower in reaction to the tightening move from China. The hike in China’s reserve requirements raises concern about the global recovery and demand for commodities. Growth led currencies like the AUD underperformed pressured by the tightening in China and weaker equity and commodity markets. CAD was pressured by disappointing Canadian trade data and weaker commodities. Canada posted a surprise trade deficit last month. JPY rebounded into the US session supported by safe haven flows and gains in cross trade as equity markets decline. JPY was also supported by a clarification from the Chinese sovereign fund official that his statement on USD reaching a bottom was his personal view not that of the Chinese government. GBP traded higher supported by improving UK trade balance as exports surged and in reaction to a UK election poll which indicates the Tories will gain majority control of parliament if the UK election were held today. EUR drifted lower pressured in cross trade to the JPY and GBP and in reaction to the spike in risk aversion. The US trade deficit widened more than expected in November. The trade data had limited impact on FX trade. Today’s tightening in China sparked unwind of carry trades. The pace of the withdrawal of liquidity in China will be key to the outlook for growth led and emerging markets currencies and risk appetite. So far the reaction to the Chinese tightening has been limited. An official at China’s central bank said that monetary policy remains reasonably loose. (more…)
Forex Market News – USD Mixed, JPY Weakens, Commodity Currencies Rally
Thursday, January 7th, 2010USD 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…)
