The Forex Daily Digest - October 6, 2009
High-ranking oil and finance officials in the Persian Gulf, denying a report in a British newspaper, said the world's oil producers will continue using the U.S. dollar as the currency for buying and selling crude. Earlier, The Independent, a London newspaper, reported that Gulf Arab states, as well as China, Russia, Japan and France, were in secret talks to end the use of the USD to trade oil, causing the U.S. currency to fall in overseas trading this morning.
The USD fell against most major rivals to start the week, losing a bit of ground after the finance ministers from the G7 nations made no specific statement of the U.S. currency in a joint communiqué at their weekend meeting in Istanbul, Turkey. Remarks by euro-zone officials last week led to increased expectations that the statement would include language specifically calling for a stronger USD. The lack of a clear mention of the USD prompted the liquidation of some long U.S. dollar positions. The USD has fallen this year as investors moved toward higher-yielding currencies and assets, like stocks, thinking these issues would see a faster increase from any economic recovery.
European Central Bank President Jean-Claude Trichet said that the need to rebalance the global economy does not at all mean the U.S. dollar should “depreciate” against the euro. Responding to a question on whether rebalancing the global economy implied a weaker dollar and a stronger euro, Trichet told reporters that, "It does not at all, at all imply a change in the bilateral position of the dollar and the euro, not at all."
French Finance Minister Christine Lagarde said Europe’s economic recovery doesn’t justify further gains in the euro, emphasizing the G7’s call for China to carry more of the burden of the dollar’s fall. She also hit back against bankers who warned that there’s a danger that too much regulation of the banking industry will hurt recovery from the worst recession since the 1940s. Lagarde said that bankers must understand that banking is “not a stand-alone activity, it’s a service to the general public and that providing it combines privilege and obligations.”
A senior European Central Bank policymaker said that China and other economically significant countries should conduct their own monetary policy instead of maintaining their currencies pegged to the U.S. dollar. China's central bank has kept the yuan almost flat against the USD since mid 2008, when the global financial crisis began to worsen.
A Chinese central bank official said the strength of lending in his country isn’t a cause for concern and will stabilize, reflecting the government’s reluctance to restrain economic stimulus measures. Chinese finance officials and the Chinese Finance Minister met in Istanbul with other G20 officials amid growing pledges to help support the world economic recovery. French Finance Minister Lagarde expressed optimism that China will play its part in rebalancing global growth.
The CAD gained for a second day against the USD after G7 avoided calling for measures to stem the slide in the U.S. dollar, which has fallen 10 percent since March. The loonie extended last week’s gain as stocks and U.S. stock futures rose.
The AUD increased for the first time in three days and the NZD also advanced as a gain in stocks encouraged investors to buy riskier assets. Meantime, New Zealand’s Finance Minster Bill English said he believes the NZD will weaken against the AUD because his nation’s economic growth and interest-rate increases will fall behind that of its neighbor. He forecasts the AUD will strengthen to 92 U.S. cents by the end of the year, compared with 87.45 cents today, while the NZD will rise to 73 cents. New Zealand’s economy expanded for the first time in six quarters in the three months to June 30th.
There are no major U.S. economic reports scheduled for release today. The only event on the economic calendar in the U.S. is the ICSC-Goldman Sachs Store Sales report.
On the earnings calendar today, expect Pepsi Bottling Group, Yum Brands, AngioDynamics, and Rocky Mountain Chocolate Factory. Tomorrow, the third quarter earnings season will begin when Alcoa (AA) releases its quarterly numbers after the equity markets close.
Happy Trading,
James Dicks
The USD fell against most major rivals to start the week, losing a bit of ground after the finance ministers from the G7 nations made no specific statement of the U.S. currency in a joint communiqué at their weekend meeting in Istanbul, Turkey. Remarks by euro-zone officials last week led to increased expectations that the statement would include language specifically calling for a stronger USD. The lack of a clear mention of the USD prompted the liquidation of some long U.S. dollar positions. The USD has fallen this year as investors moved toward higher-yielding currencies and assets, like stocks, thinking these issues would see a faster increase from any economic recovery.
European Central Bank President Jean-Claude Trichet said that the need to rebalance the global economy does not at all mean the U.S. dollar should “depreciate” against the euro. Responding to a question on whether rebalancing the global economy implied a weaker dollar and a stronger euro, Trichet told reporters that, "It does not at all, at all imply a change in the bilateral position of the dollar and the euro, not at all."
French Finance Minister Christine Lagarde said Europe’s economic recovery doesn’t justify further gains in the euro, emphasizing the G7’s call for China to carry more of the burden of the dollar’s fall. She also hit back against bankers who warned that there’s a danger that too much regulation of the banking industry will hurt recovery from the worst recession since the 1940s. Lagarde said that bankers must understand that banking is “not a stand-alone activity, it’s a service to the general public and that providing it combines privilege and obligations.”
A senior European Central Bank policymaker said that China and other economically significant countries should conduct their own monetary policy instead of maintaining their currencies pegged to the U.S. dollar. China's central bank has kept the yuan almost flat against the USD since mid 2008, when the global financial crisis began to worsen.
A Chinese central bank official said the strength of lending in his country isn’t a cause for concern and will stabilize, reflecting the government’s reluctance to restrain economic stimulus measures. Chinese finance officials and the Chinese Finance Minister met in Istanbul with other G20 officials amid growing pledges to help support the world economic recovery. French Finance Minister Lagarde expressed optimism that China will play its part in rebalancing global growth.
The CAD gained for a second day against the USD after G7 avoided calling for measures to stem the slide in the U.S. dollar, which has fallen 10 percent since March. The loonie extended last week’s gain as stocks and U.S. stock futures rose.
The AUD increased for the first time in three days and the NZD also advanced as a gain in stocks encouraged investors to buy riskier assets. Meantime, New Zealand’s Finance Minster Bill English said he believes the NZD will weaken against the AUD because his nation’s economic growth and interest-rate increases will fall behind that of its neighbor. He forecasts the AUD will strengthen to 92 U.S. cents by the end of the year, compared with 87.45 cents today, while the NZD will rise to 73 cents. New Zealand’s economy expanded for the first time in six quarters in the three months to June 30th.
There are no major U.S. economic reports scheduled for release today. The only event on the economic calendar in the U.S. is the ICSC-Goldman Sachs Store Sales report.
On the earnings calendar today, expect Pepsi Bottling Group, Yum Brands, AngioDynamics, and Rocky Mountain Chocolate Factory. Tomorrow, the third quarter earnings season will begin when Alcoa (AA) releases its quarterly numbers after the equity markets close.
Happy Trading,
James Dicks
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