Currency News

On Friday, the event of the day was the release of the US Gross Domestic Product. In annualized terms, the GDP grew at a rate of 1.9%. This represents a marginal improvement over what was reported last month, 1.8%, but hardly a reason get excited. If the GDP was a barometer of recovery, one could say that the reading is flat, with no significant changes to report. It turned out that the forecast was correct this time and markets were not surprised by the numbers. Currencies took the news in stride, with very little response. What was expected to be a pivotal event of the day became a dull moment during an otherwise active period. There were good size price moves both before and after the GDP data, but because the numbers itself did not produce additional volatility, trading ranges for the entire day were within the recent norm. The USD pairs, like the AUD-USD, EUR-USD or the GBP-USD moved about as much...

Equities Asian markets ended Friday mixed, following Wall Street’s advance on Thursday. The Nikkei rose .5% to 9514, although it was well of its high of 9614 hit earlier in the morning. In Korea, the Kospi slumped 1.2% after the central bank unexpectedly raised interest rates. The Hang Seng fell .8%, extending its losing streak to 7 days, and the Shanghai Composite rose fractionally. After the close, China reported export data showed growth was lower than expected, adding to concerns that the global economic recovery is weaker than hoped. European markets fell sharply, closing at their lowest level in three months. The FTSE sank 1.6% to 5766, the DAX fell 1.3%, and the CAC40 tumbled 1.9%. The bearish tone continued in the US, as the Dow dropped 172 points to 11952, its first close below 12000 since March. The Nasdaq lost 1.5%, and the S&P decline 1.4% to 1271. Dow Drops more than 170 Points Semiconductor stocks fell, after Intel was downgraded by Macquarie. Steel stocks rallied,...

The Canadian Dollar has been the weakest one of the commodity currencies for some time. It also lost ground against the USD, which rallied to above 0.9800 for the first time since late March. With this in a background, today’s interest rate decision by the Bank of Canada was highly anticipated. While the market participants did not expect a hike, yet, everybody wanted to hear what the central bank is going to say about possible future actions, especially since economic indicators from Canada have been mixed and hard to interpret. Turned out that the forecast was correct – the BoC left interest rates unchanged at 1%. However, the Governor Mark Carney said that the economic recovery was proceeding as expected, and promised a raise “eventually”. That is a very vague term, revealing, well, nothing, but markets took it to heart and the Canadian Dollar rallied. Now we need to see a continuation tomorrow, otherwise today’s action is only a correction within...

What a quiet Wednesday, a second day of consolidation following big moves from Monday (my late Monday). The Japanese Yen became stronger, moving as much as few hundred pips in some pairs in one day. That was followed by a tight range on Tuesday and an even tighter one on Wednesday. Not very surprising, really, the Yen, as well as the Dollar, have been selling off for a few weeks, ever since the G7 intervention. For the JPY that meant over 1000 pips moves in crosses, so a correction is not out of place. Is the correction over or are the Yen pairs going to drop more? There is a good article on this very subject on the Forex Blog,by Adam Kritzer, where he discusses number of fundamental factors. From my point of view, it has not been decided yet. Charts of JPY pairs show consolidations, possibly pointing to another round of sell offs, meaning stronger Yen.  But that is stretching it a little,...

Today the markets de-correlated slightly where riskier assets such as equity markets and currencies, bucked the trend despite the political unrest that is evident in Egypt. The US equity markets and the Euro, moved higher as fundamentals continued to drive these markets higher. German interest rates have move higher relative to US interest rates, making it more attractive to hold the EUR/USD relative to the US dollar. The euro has gained buying interest as the widening of interest rates between US and German have trumped the flight to safety trade for the dollar. Euro zone inflation increased to 2.4% on a year over year basis in January from 2.2% year over year in December. The increase has increased short term German interest rates and has led the 2-year US-German differential higher to 85 basis points which is the widest since March of 2009. Inflation levels over 2%, will likely attract hawkish comments from the ECB. The Euro tested lower levels early in...

The confidence in the greenback is still ascending better than expected data reflects bullish economic growth outlook in US and better demand for the US dollar borrowing underpinning the US bonds yields helping the equities markets and the business spending driving the gold prices down after December ADP Employment added triple of the market expectations with 297k added jobs from 93k in November while the market were waiting for just 100k to underpin the growing positive sentiment towards the US economy which has started last week by US December Chicago PMI which came at 68.6 while it was waited to be 61.5 from 62.5 in November which show that we can have stronger than expected and last week weekly jobless claim coming at 388k while the market was expecting 412k which show that there can be improving of US labor report data which are expected to come by the end of this week showing that there is a rising of...

Indices Stocks ended a notch below record two year highs with solid double-digit gains for the year after a quiet New Year’s Eve session that ended with the major indexes narrowly mixed. The Dow Jones Industrial Average rose 1,149.46 points in 2010, or 11.02 percent, closing just 7.87 points shy of its closing high of 11,585.38 for the year, hit on Dec. 29. The Blue-chip index is up 31.92 percent since 2008. On Friday, the DOW gained 7.80 points or 0.07 percent. The NASDAQ rose 383.72 points, or 16.9 percent this year. The tech-heavy index is up 68.2 percent since 2008. On Friday, the NASDAQ fell 10.11 points, or 0.4 percent. The NASDAQ rose 383.72 points, or 16.9 percent this year. The tech-heavy index is up 68.2 percent since 2008. On Friday, the NASDAQ fell 10.11 points, or 0.4 percent. Dow Jones Industrial Average (December 27-31)             FOREX The US Dollar finished 2010 on a weak note, falling against all G10 currency counterparts in the final week of trading. Yet the Dollar...

By Hideyuki Sano TOKYO, Dec 27 (Reuters) - The Australian dollar dipped on Monday after China's central bank raised rates at the weekend, and some analysts say the chance of more tightening in China could prompt investors to sell the Aussie after the year-end holidays. The yen also hit a three week high against the dollar, although thin trading conditions are likely to have exaggerated price moves. While the market had been expecting Beijing to tighten further, the timing was a surprise as there had been doubts whether it would raise rates before the end of the year. Saturday's move by the Chinese central bank to raise interest rates was the second in just over two months, underscoring its desire to dampen domestic demand and get price pressures under control. Australia has benefited from strong Chinese demand for iron ore and other commodities. The news knocked the Australian dollar as low as $0.9987 in thin, erratic trade, with many of the region's financial centres on holiday,...

Bias to safety currencies with exceptions. Strongest over the past 24 hours: USD, CHF, CAD in that order. Weakest: NZD, EUR, GBP in that order. Note or top 3 strongest and weakest have barely changed over the past 48 hours. Risk off day again from increased risk aversion over the past days based on a combination of cautious Fed comments about US conditions, recent credit downgrade warnings for Belgium and Spain, tepid Portuguese bond auctions, and uncertainty ahead of the EU summit. Both warnings are significant. Spain is considered too big to bail out and Belgium is viewed as a core rather than PIIGS-type economy, and the news suggests the EU crisis could be spreading beyond the PIIGS group to the core economies. These factors have overwhelmed positive German and EZ ZEW sentiment surveys. Political turmoil in Italy has not helped, though the PM did survive a no confidence vote and riots over austerity spending cuts have subsided. US Dollar Daily Outlook: Up vs....

DUBAI, Dec 5 (Reuters) - The United Arab Emirates hopes it and Oman will rejoin a planned Gulf single currency project one day, UAE economy minister was quoted as saying by a Saudi newspaper on Sunday, ahead of a Gulf rulers summit this week. Rulers from Gulf Arab countries will meet in UAE capital Abu Dhabi on Dec. 6-7 to discuss political, security and financial issues affecting the world's top oil exporting region. "The Emirates still hope that there will be a single currency for the countries of the (Gulf Cooperation) Council one day," Sultan bin Saeed al-Mansouri told Saudi newspaper Al-Eqtisadiah. The second largest Arab economy withdrew from the project last year in protest against placing the joint monetary council in rival Saudi Arabia. UAE policymakers had said rejoining was not on the table unless it is profitable. Neighbouring non-OPEC Oman pulled out in 2006 and ruled out any comeback. Only four countries from the six-nation GCC -- Saudi Arabia, Kuwait, Qatar and Bahrain...