The Forex Daily Digest – October 22, 2009
The dollar fell against the JPY in Asia due to profit-taking, but it may rise briefly later in the day as Japanese fund players are expected to launch their buying for new trust funds. The dollar weakened to the lowest level in 14 months against the euro as signs the global economy is recovering boosted demand for higher-yielding assets.
The CAD fell for a second day as declines in global stocks and crude oil, the nation’s largest export, slowed investors’ appetite for riskier assets. On Tuesday the CAD fell the most in four months after the Bank of Canada amplified its warning that the currency’s strength is slowing an economic recovery, boosting speculation interest rates will remain unchanged longer than expected. It weakened today against most of its counterparts.
Sterling was the focus in the foreign exchanges, its rise to one-month highs against the USD and EUR after Bank of England minutes keeping the U.S. dollar steady against a basket of currencies. The dollar gained against the EUR and currencies such as the AUD, however, as lower equities and oil prices discouraged investors from buying currencies seen as riskier.
The AUD advanced to the strongest since August 2008 after its central bank said keeping borrowing costs low was no longer necessary. The EUR rose for a ninth day against the JPY as Asian stocks extended a global rally before reports this week that economists said will show the US housing market and German business confidence improved, damping demand for Japan’s currency as a shelter from the recession.
The GBP and the NZD rose after central bankers signaled interest rates may increase. European stocks and U.S. index futures dropped as Deutsche Bank AG and PSA Peugeot Citroen reported results that disappointed some investors. Bank of England Governor Mervyn King started preparing Britons for higher interest rates, writing in the Herald newspaper of Scotland that “it would be wise to take account” of the prospect of rising borrowing costs. Reserve Bank of New Zealand Governor Alan Bollard said a strengthening currency isn’t an obstacle to raising rates.
A prominent economist told a conference of international monetary policy makers hosted by the San Francisco Federal Reserve that the U.S. dollar is likely to remain the world's reserve currency for decades. The USD has dropped in value relative to other currencies in recent months as investors have questioned the sustainability of the large U.S. budget deficit. Some countries, including China, a large holder of dollar-denominated assets, have suggested that there may be room for other options besides the dollar as the global reserve currency.
San Francisco Fed President Janet Yellen said the time for the U.S. Federal Reserve to start pulling back its extensive support for the economy is not close at hand and policymakers have time to decide what sequence of steps they will take. Discussing concerns about the declining value of the U.S. dollar relative to other currencies amid worries about the yawning U.S. budget deficit and rising public debt, Yellen said imbalances in trade and capital are a liability in the global economy. If the United States and Asian countries address the causes of those imbalances, Yellen said those actions could increase confidence in the value of the USD.
Adding to pressure mounting against the USD, left-wing Latin American leaders gathered in Bolivia, over the weekend for the seventh Bolivarian Alliance for the Peoples of Our Americas (ALBA) summit and agreed to create a new regional currency in a bid to stop using American Federal Reserve Notes. Initially the new fiat money will be used to settle foreign and commercial payments among member nations, with the goal of eventually creating a unified monetary system. The new currency is being called the “sucre” - short for Unified System of Regional Compensation in Spanish, but also named after South American independence leader Jose Antonio de Sucre who fought against colonial Spain with the more well-known Simon Bolivar — and aims to challenge the domination of U.S. Federal Reserve Notes. It is scheduled go into effect early next year.
On the economic calendar today watch for the Initial Jobless Claims report for the week of October 17th, the Conference Board’s Leading Indicators for September and the FHFA Housing Price Index for August.
Companies scheduled to release earnings include Amazon, 3M, Delta Air Lines, AT&T, Bristol-Myers Squibb, American Express, McDonalds, Capital One Financial, Fifth Third Bancorp, Occidental Petroleum, Credit Suisse Group, Merck, U.S. Airways, and Xerox.
Happy Trading,
James Dicks
The CAD fell for a second day as declines in global stocks and crude oil, the nation’s largest export, slowed investors’ appetite for riskier assets. On Tuesday the CAD fell the most in four months after the Bank of Canada amplified its warning that the currency’s strength is slowing an economic recovery, boosting speculation interest rates will remain unchanged longer than expected. It weakened today against most of its counterparts.
Sterling was the focus in the foreign exchanges, its rise to one-month highs against the USD and EUR after Bank of England minutes keeping the U.S. dollar steady against a basket of currencies. The dollar gained against the EUR and currencies such as the AUD, however, as lower equities and oil prices discouraged investors from buying currencies seen as riskier.
The AUD advanced to the strongest since August 2008 after its central bank said keeping borrowing costs low was no longer necessary. The EUR rose for a ninth day against the JPY as Asian stocks extended a global rally before reports this week that economists said will show the US housing market and German business confidence improved, damping demand for Japan’s currency as a shelter from the recession.
The GBP and the NZD rose after central bankers signaled interest rates may increase. European stocks and U.S. index futures dropped as Deutsche Bank AG and PSA Peugeot Citroen reported results that disappointed some investors. Bank of England Governor Mervyn King started preparing Britons for higher interest rates, writing in the Herald newspaper of Scotland that “it would be wise to take account” of the prospect of rising borrowing costs. Reserve Bank of New Zealand Governor Alan Bollard said a strengthening currency isn’t an obstacle to raising rates.
A prominent economist told a conference of international monetary policy makers hosted by the San Francisco Federal Reserve that the U.S. dollar is likely to remain the world's reserve currency for decades. The USD has dropped in value relative to other currencies in recent months as investors have questioned the sustainability of the large U.S. budget deficit. Some countries, including China, a large holder of dollar-denominated assets, have suggested that there may be room for other options besides the dollar as the global reserve currency.
San Francisco Fed President Janet Yellen said the time for the U.S. Federal Reserve to start pulling back its extensive support for the economy is not close at hand and policymakers have time to decide what sequence of steps they will take. Discussing concerns about the declining value of the U.S. dollar relative to other currencies amid worries about the yawning U.S. budget deficit and rising public debt, Yellen said imbalances in trade and capital are a liability in the global economy. If the United States and Asian countries address the causes of those imbalances, Yellen said those actions could increase confidence in the value of the USD.
Adding to pressure mounting against the USD, left-wing Latin American leaders gathered in Bolivia, over the weekend for the seventh Bolivarian Alliance for the Peoples of Our Americas (ALBA) summit and agreed to create a new regional currency in a bid to stop using American Federal Reserve Notes. Initially the new fiat money will be used to settle foreign and commercial payments among member nations, with the goal of eventually creating a unified monetary system. The new currency is being called the “sucre” - short for Unified System of Regional Compensation in Spanish, but also named after South American independence leader Jose Antonio de Sucre who fought against colonial Spain with the more well-known Simon Bolivar — and aims to challenge the domination of U.S. Federal Reserve Notes. It is scheduled go into effect early next year.
On the economic calendar today watch for the Initial Jobless Claims report for the week of October 17th, the Conference Board’s Leading Indicators for September and the FHFA Housing Price Index for August.
Companies scheduled to release earnings include Amazon, 3M, Delta Air Lines, AT&T, Bristol-Myers Squibb, American Express, McDonalds, Capital One Financial, Fifth Third Bancorp, Occidental Petroleum, Credit Suisse Group, Merck, U.S. Airways, and Xerox.
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