The Forex Daily Digest – November 5, 2009
The USD fell against the JPY and the GBP, though the dollar moved up against the EUR ahead of a rate decision in Frankfurt. The GBP gained ground following the Bank of England's decision to expand its quantitative easing program by 25 billion pounds. Some in the market had expected an even bigger expansion of the program that buys up gilts and other assets. Interest rates in the U.K. were kept at a record low of 0.5%. Yesterday, the USD lost some ground against major counterparts after the Federal Reserve left interest rates unchanged near zero and kept its commitment to exceptionally low rates
The European Central Bank may signal it’s moving closer to withdrawing emergency stimulus measures after leaving its benchmark interest rate at a record low today. ECB officials meeting in Frankfurt kept the key rate at 1 percent, as predicted. The ECB will offer banks unlimited funds for a year for the third time on December 15th. Banks drew 75 billion euros ($111 billion) at the last offering in September, down from 442 billion euros in the first tender in June. Trichet has kept open the option of charging a higher interest rate on the December loans.
Oil fell below $80 a barrel after a sharp decline in U.S. crude inventories sent prices up 1 percent, as traders attempted to lock in profits amid weaker equity markets and a firming dollar. News of a surprise 4 million barrel drop in U.S. crude stocks last week sparked a rally yesterday which saw prices jump to within a dollar of the October 12-month high of $82 a barrel.
The AUD and NZD rose as the Federal Reserve reiterated its plan to keep borrowing costs near zero for an extended period, spurring demand for higher-yielding assets. The AUD, the world’s best performer versus the USD over the past year, had fallen as retail sales unexpectedly dropped, spurring speculation that the central bank will temper the pace of interest-rate increases. Meantime, the Royal Bank of Scotland Group Plc said it will likely raise its forecast for the Australian dollar to reach parity with the U.S. currency as the South Pacific nation joins Asia in the “fast lane” of the global economy.
New Zealand’s unemployment rate rose to a nine-year high in the third quarter, a report showed today, as central bank Governor Alan Bollard said a strengthening currency will slow the nation’s recovery from a recession. The jobless rate increased to 6.5 percent from 6 percent in the previous three months.
Strategists remain convinced the JPY will lose ground against the USD within the year. The latest monthly survey shows the yen trading at 90 in a month, around where it was trading yesterday. Median forecasts saw dollar/yen at around 92 in three months and slightly higher at 95 in six, rising to 98 in 12 months. The November poll showed median forecasts for the JPY well below 100 for all four time-horizons for the second month running.
Toyota Motor Corp said it now expects the USD to average 93 JPY and the EUR 132 yen in the business year ending in March 2010. It had previously assumed an average dollar rate of 92 yen and euro of 131 yen. Toyota also lifted its group-based global vehicle sales forecast for the 2009/10 business year to 7.03 million units from 6.6 million.
U.S. business productivity in the third quarter grew at the fastest pace in six years and new claims for jobless aid fell to a 10-month low last week. U.S. business productivity in the third quarter grew at the fastest pace in six years and new claims for jobless aid fell to a 10-month low last week. In another report, the department said initial claims for state unemployment benefits dropped 20,000 to 512,000 last week, the lowest since early January.
Finishing the week’s economic calendar is the October Nonfarm Payrolls report, along with the Average Workweek numbers, Hourly Earnings and the Unemployment Rate. Many analysts believe the U.S. Unemployment Rate could reach 10 percent. Other economic reports scheduled for release are the September Wholesale Inventories report and the Consumer Credit report for September.
On Friday's earnings calendar watch for British Airways, General Steel Holdings, American International Group (AIG), Constellation Energy, Kelly Services, The Blackstone Group, and U.S. Global Investors.
Happy Trading,
James Dicks
The European Central Bank may signal it’s moving closer to withdrawing emergency stimulus measures after leaving its benchmark interest rate at a record low today. ECB officials meeting in Frankfurt kept the key rate at 1 percent, as predicted. The ECB will offer banks unlimited funds for a year for the third time on December 15th. Banks drew 75 billion euros ($111 billion) at the last offering in September, down from 442 billion euros in the first tender in June. Trichet has kept open the option of charging a higher interest rate on the December loans.
Oil fell below $80 a barrel after a sharp decline in U.S. crude inventories sent prices up 1 percent, as traders attempted to lock in profits amid weaker equity markets and a firming dollar. News of a surprise 4 million barrel drop in U.S. crude stocks last week sparked a rally yesterday which saw prices jump to within a dollar of the October 12-month high of $82 a barrel.
The AUD and NZD rose as the Federal Reserve reiterated its plan to keep borrowing costs near zero for an extended period, spurring demand for higher-yielding assets. The AUD, the world’s best performer versus the USD over the past year, had fallen as retail sales unexpectedly dropped, spurring speculation that the central bank will temper the pace of interest-rate increases. Meantime, the Royal Bank of Scotland Group Plc said it will likely raise its forecast for the Australian dollar to reach parity with the U.S. currency as the South Pacific nation joins Asia in the “fast lane” of the global economy.
New Zealand’s unemployment rate rose to a nine-year high in the third quarter, a report showed today, as central bank Governor Alan Bollard said a strengthening currency will slow the nation’s recovery from a recession. The jobless rate increased to 6.5 percent from 6 percent in the previous three months.
Strategists remain convinced the JPY will lose ground against the USD within the year. The latest monthly survey shows the yen trading at 90 in a month, around where it was trading yesterday. Median forecasts saw dollar/yen at around 92 in three months and slightly higher at 95 in six, rising to 98 in 12 months. The November poll showed median forecasts for the JPY well below 100 for all four time-horizons for the second month running.
Toyota Motor Corp said it now expects the USD to average 93 JPY and the EUR 132 yen in the business year ending in March 2010. It had previously assumed an average dollar rate of 92 yen and euro of 131 yen. Toyota also lifted its group-based global vehicle sales forecast for the 2009/10 business year to 7.03 million units from 6.6 million.
U.S. business productivity in the third quarter grew at the fastest pace in six years and new claims for jobless aid fell to a 10-month low last week. U.S. business productivity in the third quarter grew at the fastest pace in six years and new claims for jobless aid fell to a 10-month low last week. In another report, the department said initial claims for state unemployment benefits dropped 20,000 to 512,000 last week, the lowest since early January.
Finishing the week’s economic calendar is the October Nonfarm Payrolls report, along with the Average Workweek numbers, Hourly Earnings and the Unemployment Rate. Many analysts believe the U.S. Unemployment Rate could reach 10 percent. Other economic reports scheduled for release are the September Wholesale Inventories report and the Consumer Credit report for September.
On Friday's earnings calendar watch for British Airways, General Steel Holdings, American International Group (AIG), Constellation Energy, Kelly Services, The Blackstone Group, and U.S. Global Investors.
Happy Trading,
James Dicks
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