The Forex Daily Digest – September 21, 2009
The USD gained a bit of ground at the end of the week, as traders looked toward next week's meeting of Federal Reserve policy makers and reduced bets that the greenback would continue declining steadily. The Fed's rate-setting Federal Open Market Committee (FOMC) meets Tuesday and Wednesday. Analysts anticipate no change to the central bank's target overnight lending rate between banks, but speculate whether the fed will make changes to its debt-buying programs.
The EUR, which had pressed to new yearly highs against the dollar, was slightly lower. The dollar index has lost 0.23% last week while the EUR gained 1.22% and the GBP was up 1.29% against the dollar. The USD increased 0.45% versus the JPY.
The Group of 20 leaders may try to put their best faces and convince a global population on next week at their summit in Pittsburgh about how they saved the world economy and made sure this type of crisis never happens again, but many analysts have already turned their backs on the group, not convinced that any serious reform plans are on the table. The G20 has superseded the Group of Seven as the premier semiannual gathering for the heads of state of the major economies. The G20 leaders will meet in Pittsburgh September 24-25. The G20 met first in November and then again in April, laying out a series of principles for addressing the global economic crisis, most notably that the countries would not raise trader barriers.
President Obama used his weekly radio address on Saturday to deal with financial reform and announced more federal protection for consumers. The president said he will use the G20 platform to speak to other world leaders about the need to improve regulations to provide more safety for the global financial system. Topping Obama's goals is the creation of a proposed Consumer Financial Protection Agency that he said would help enforce rules on transparency in truth-telling at the time consumers sign mortgages or take on credit cards.
The White House top economic adviser said on Friday that China's massive holdings of U.S. government bonds are a source of mutual benefit to both countries. National Economic Council Director Lawrence Summers told a conference at Georgetown University, “We have a substantial appetite to borrow and they have a substantial appetite to hold reserves and lend to us.” Defending Obama's decision to borrow heavily to finance a $787 billion fiscal stimulus program to lift the economy out of recession, Summers said big foreign holdings of U.S. Treasuries made it important to pay down the debt as growth returns.
The GBP had its biggest week drop against the EUR in eight months after the Bank of England said it might cut the deposit rate paid to financial institutions. The GBP weakened to more than 90 pence per EUR for the first time in four months as traders reduced bets U.K. policy makers will raise the benchmark interest rate form a record low. The difference in yield between two and 10 year gilts widened to the most since January 1992.
The CAD finished lower versus a generally firming U.S. currency on Friday, pulled down by retreating commodity prices. The currency was restricted to a C$1.0650-C$1.0750 range, but was volatile within this band, responding to movements in equities and the price of oil and gold and as liquidity thinned ahead of holidays in Japan and Singapore next week.
The economic calendar this week includes the Leading Indicators, FHFA US Housing Price Index, Crude Inventories, Initial Jobless Claims, Existing and New Home Sales, Durable Goods, and the FOMC Rate Decision.
Watch for earnings this week from ConAgra Foods, Lennar Corp, CarMax, Bed, Bath & Beyond, Red Hat, Carnival Corp, AutoZone, 3Com, Research In Motion Limited, KB Home, Rite Aid, and Vail Resorts.
Happy trading,
James Dicks
The EUR, which had pressed to new yearly highs against the dollar, was slightly lower. The dollar index has lost 0.23% last week while the EUR gained 1.22% and the GBP was up 1.29% against the dollar. The USD increased 0.45% versus the JPY.
The Group of 20 leaders may try to put their best faces and convince a global population on next week at their summit in Pittsburgh about how they saved the world economy and made sure this type of crisis never happens again, but many analysts have already turned their backs on the group, not convinced that any serious reform plans are on the table. The G20 has superseded the Group of Seven as the premier semiannual gathering for the heads of state of the major economies. The G20 leaders will meet in Pittsburgh September 24-25. The G20 met first in November and then again in April, laying out a series of principles for addressing the global economic crisis, most notably that the countries would not raise trader barriers.
President Obama used his weekly radio address on Saturday to deal with financial reform and announced more federal protection for consumers. The president said he will use the G20 platform to speak to other world leaders about the need to improve regulations to provide more safety for the global financial system. Topping Obama's goals is the creation of a proposed Consumer Financial Protection Agency that he said would help enforce rules on transparency in truth-telling at the time consumers sign mortgages or take on credit cards.
The White House top economic adviser said on Friday that China's massive holdings of U.S. government bonds are a source of mutual benefit to both countries. National Economic Council Director Lawrence Summers told a conference at Georgetown University, “We have a substantial appetite to borrow and they have a substantial appetite to hold reserves and lend to us.” Defending Obama's decision to borrow heavily to finance a $787 billion fiscal stimulus program to lift the economy out of recession, Summers said big foreign holdings of U.S. Treasuries made it important to pay down the debt as growth returns.
The GBP had its biggest week drop against the EUR in eight months after the Bank of England said it might cut the deposit rate paid to financial institutions. The GBP weakened to more than 90 pence per EUR for the first time in four months as traders reduced bets U.K. policy makers will raise the benchmark interest rate form a record low. The difference in yield between two and 10 year gilts widened to the most since January 1992.
The CAD finished lower versus a generally firming U.S. currency on Friday, pulled down by retreating commodity prices. The currency was restricted to a C$1.0650-C$1.0750 range, but was volatile within this band, responding to movements in equities and the price of oil and gold and as liquidity thinned ahead of holidays in Japan and Singapore next week.
The economic calendar this week includes the Leading Indicators, FHFA US Housing Price Index, Crude Inventories, Initial Jobless Claims, Existing and New Home Sales, Durable Goods, and the FOMC Rate Decision.
Watch for earnings this week from ConAgra Foods, Lennar Corp, CarMax, Bed, Bath & Beyond, Red Hat, Carnival Corp, AutoZone, 3Com, Research In Motion Limited, KB Home, Rite Aid, and Vail Resorts.
Happy trading,
James Dicks
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