The Forex Daily Digest – November 3, 2009
The USD hit a one-month high against a currency basket as investors retreated from risk assets on jitters over banks and braced for central bank meetings in the United States, euro zone and UK. Sterling tumbled to a one-week low against the dollar after the UK Treasury announced a shake-up of British banks, which raised concerns about the financial sector.
Federal Reserve officials meeting this week must weigh improving economic data against the risk, reinforced by a persistently weak job market that a burgeoning recovery remains on shaky ground. A 3.5 percent annualized jump in third quarter gross domestic product revived debate between analysts who believe a sustainable turnaround is under way, and those who think growth will falter once a heavy dose of stimulus fades. The uncertainty is evident within the Fed itself, with many policymakers emphasizing the hazards in their outlook, even as they vow to vigorously fight any early signs of inflation.
Australia's central bank raised interest rates for a second straight month on Tuesday as it steadily withdrew stimulus from an improving economy, but was careful not to fuel expectations for another hike in December. The Australian dollar dipped and bill futures rallied as investors detected a hint of caution in the Reserve Bank of Australia's words even as it lifted rates by 25 basis points to 3.5 percent. The NZD rose after U.S. stocks rebounded from their biggest weekly drop since May as Ford Motor Co.’s profit beat analyst estimates and housing reports signaled an economic recovery.
A report by the parliamentary budget officer said that Canada's economy will not fully recover until 2013 and the federal government will carry a structural budgetary deficit of C$19 billion ($17.6 billion) after the crisis. The budget officer (PBO), Kevin Page, issued a report revising his fiscal and growth forecasts and bringing them roughly in line with those of the Conservative government of Prime Minister Stephen Harper, showing Canada is one of the G7 countries to better withstand the global financial crisis.
The EUR extended gains against the USD, after data showed U.S. home prices for August increased for a fourth straight month. The EUR rose before the data. The EUR has become a proxy for risk appetite, rising when economic data is positive.
The CAD was slightly weaker against the USD, hurt by less risk appetite arising from concerns about the European banking sector. The Canadian dollar was among several in a basket of currencies to be hit by risk aversion, which put the U.S. dollar on a course higher.
On the economic calendar on Wednesday look for the Challenger Job report, the ADP Employment report, ISM Services index, Crude Inventories and the FOMC Rate Decision.
Earnings scheduled for Wednesday include Cisco Systems, News Corp, Baker Hughes, Vonage Holdings, Conseco, the Bank of Ireland, Ambac Financial, Comcast Corp, El Paso Corp, HealthSouth, Martha Stewart Living Omnimedia, Molson Coors, Pulte Homes, and Time Warner.
Happy Trading,
James Dicks
Federal Reserve officials meeting this week must weigh improving economic data against the risk, reinforced by a persistently weak job market that a burgeoning recovery remains on shaky ground. A 3.5 percent annualized jump in third quarter gross domestic product revived debate between analysts who believe a sustainable turnaround is under way, and those who think growth will falter once a heavy dose of stimulus fades. The uncertainty is evident within the Fed itself, with many policymakers emphasizing the hazards in their outlook, even as they vow to vigorously fight any early signs of inflation.
Australia's central bank raised interest rates for a second straight month on Tuesday as it steadily withdrew stimulus from an improving economy, but was careful not to fuel expectations for another hike in December. The Australian dollar dipped and bill futures rallied as investors detected a hint of caution in the Reserve Bank of Australia's words even as it lifted rates by 25 basis points to 3.5 percent. The NZD rose after U.S. stocks rebounded from their biggest weekly drop since May as Ford Motor Co.’s profit beat analyst estimates and housing reports signaled an economic recovery.
A report by the parliamentary budget officer said that Canada's economy will not fully recover until 2013 and the federal government will carry a structural budgetary deficit of C$19 billion ($17.6 billion) after the crisis. The budget officer (PBO), Kevin Page, issued a report revising his fiscal and growth forecasts and bringing them roughly in line with those of the Conservative government of Prime Minister Stephen Harper, showing Canada is one of the G7 countries to better withstand the global financial crisis.
The EUR extended gains against the USD, after data showed U.S. home prices for August increased for a fourth straight month. The EUR rose before the data. The EUR has become a proxy for risk appetite, rising when economic data is positive.
The CAD was slightly weaker against the USD, hurt by less risk appetite arising from concerns about the European banking sector. The Canadian dollar was among several in a basket of currencies to be hit by risk aversion, which put the U.S. dollar on a course higher.
On the economic calendar on Wednesday look for the Challenger Job report, the ADP Employment report, ISM Services index, Crude Inventories and the FOMC Rate Decision.
Earnings scheduled for Wednesday include Cisco Systems, News Corp, Baker Hughes, Vonage Holdings, Conseco, the Bank of Ireland, Ambac Financial, Comcast Corp, El Paso Corp, HealthSouth, Martha Stewart Living Omnimedia, Molson Coors, Pulte Homes, and Time Warner.
Happy Trading,
James Dicks
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