The Forex Daily Digest – September 18, 2008
The USD turned higher as pessimism about the economic attitude was felt across the markets, strengthening the sales of equities and higher-yielding currencies. The Dow Jones Industrial Average finished just slightly lower (-7.79) after three consecutive days of gains, with telecommunication services and financial shares causing the loss. Wall Street analysts said the market was due for a sell-off after totaling gains in eight of the last 10 trading sessions.
Stocks increased after the Federal Reserve Bank of Philadelphia's index on manufacturing jumped far more than anticipated this month. In addition, earlier reports showed weekly initial U.S. jobless claims rose less than expected and housing starts rose to a nine-month high, even as analysts pointed out grim components within each report.
The USD has been experiencing some tough times in the past few weeks, with the dollar index losing 2.41% this month alone. Pressure has been fixed in part to rising risk appetite, which has seen investors avoid the USD’s safe-haven status in favor of equities and other assets. Still others expect the USD to continue its more conventional relationship with economic data, rising with positive economic news and falling when the outlook for the U.S. turns murky.
The Bank of Japan held its target lending rate today at 0.1 percent, compared with zero to 0.25 percent in the U.S. and 2 percent in South Korea. BOJ Governor Masaaki Shirakawa said a day after the JPY reached a seven-week high against the USD that currencies should move steadily because sharp changes in exchange rates can hurt the economy. Newly appointed Finance Minister Hirohisa Fujii said he doesn’t agree a weaker yen is necessarily good for exporters.
According to currency analysts at BNP Paribas, the EUR will move to parity against the GBP and reach its highest level in more than a year against the UD as investors borrow low-cost funds in the U.K. and U.S. to buy higher-yielding assets. The Bank of England and Federal Reserve are flooding their financial systems with cash to keep borrowing costs low on expectations their economies will recover slowly from recession. That will encourage investors to use funds from the nations to purchase securities in countries with higher interest rates.
The AUD and NZD fell from their highest levels in more than a year against the USD on a drop in commodities and concern the currencies have become overvalued. The Aussie and kiwi decreased for the first time in three days as gold declined from an 18-month high and silver and copper dropped. And the CAD advanced to its highest level since October against the USD as speculation the global recession is over encouraged appetite for higher-yielding assets.
Have a great weekend and I’ll see you back here on Monday morning with another Forex Daily Digest.
Happy Trading,
James Dicks
Stocks increased after the Federal Reserve Bank of Philadelphia's index on manufacturing jumped far more than anticipated this month. In addition, earlier reports showed weekly initial U.S. jobless claims rose less than expected and housing starts rose to a nine-month high, even as analysts pointed out grim components within each report.
The USD has been experiencing some tough times in the past few weeks, with the dollar index losing 2.41% this month alone. Pressure has been fixed in part to rising risk appetite, which has seen investors avoid the USD’s safe-haven status in favor of equities and other assets. Still others expect the USD to continue its more conventional relationship with economic data, rising with positive economic news and falling when the outlook for the U.S. turns murky.
The Bank of Japan held its target lending rate today at 0.1 percent, compared with zero to 0.25 percent in the U.S. and 2 percent in South Korea. BOJ Governor Masaaki Shirakawa said a day after the JPY reached a seven-week high against the USD that currencies should move steadily because sharp changes in exchange rates can hurt the economy. Newly appointed Finance Minister Hirohisa Fujii said he doesn’t agree a weaker yen is necessarily good for exporters.
According to currency analysts at BNP Paribas, the EUR will move to parity against the GBP and reach its highest level in more than a year against the UD as investors borrow low-cost funds in the U.K. and U.S. to buy higher-yielding assets. The Bank of England and Federal Reserve are flooding their financial systems with cash to keep borrowing costs low on expectations their economies will recover slowly from recession. That will encourage investors to use funds from the nations to purchase securities in countries with higher interest rates.
The AUD and NZD fell from their highest levels in more than a year against the USD on a drop in commodities and concern the currencies have become overvalued. The Aussie and kiwi decreased for the first time in three days as gold declined from an 18-month high and silver and copper dropped. And the CAD advanced to its highest level since October against the USD as speculation the global recession is over encouraged appetite for higher-yielding assets.
Have a great weekend and I’ll see you back here on Monday morning with another Forex Daily Digest.
Happy Trading,
James Dicks
Views: 4
Comment
© 2024 Created by James Dicks.
Powered by
You need to be a member of JDFN Financial Network to add comments!
Join JDFN Financial Network