The Forex Daily Digest – November 17, 2009
The USD ground versus the EUR and high-yielding commodity currencies as equity markets weakened around the world, indicating a retreat in appetite for risk among investors. The USD lost some of its earlier gains against the JPY and EUR after data showed smaller than expected gains in producer prices last month, adding to the view that U.S. interest rates will stay low for some time yet.
Wholesale prices rose less than expected in October as the weak economy keeps inflation pressures largely in check. The Labor Department said that the Producer Price Index rose 0.3 percent last month, after falling 0.6 percent in September. Analysts expected a 0.5 percent gain.
The EUR made its latest move above $1.50, effectively ignoring Fed Chairman Ben Bernanke that the U.S. central bank was attentive to the suggestion of "changes in the value of the dollar." ECB President Jean-Claude Trichet welcomed Bernanke's remarks and said the euro was never intended to be a reserve currency.
President Obama continues his visit to mainland China. In a Beijing news conference, the president said he welcomed China's commitment to "move toward a more market-oriented exchange rate over time," but he didn't clearly request Beijing to permit the yuan to appreciate. America’s trade deficit with China widened to a 10-month high in September, raising concern that the combination of a recovering U.S. economy and a fixed yuan exchange rate against the USD could worsen global imbalances.
The managing director of the International Monetary Fund, Dominique Strauss-Kahn, said that the yuan may be added to the basket of currencies that set the value of IMF monetary units called special drawing rights. Strauss-Kahn said the yuan could be added in a “while.” The move would require the currency to be market-based.
Also from Asia, the USD was supported in Asian trade after minutes from the Reserve Bank of Australia's November 3rd policy meeting affected the AUD. The RBA said the rate of its interest-rate hikes was "an open question," which pushed the country's currency lower against major rivals, including the USD.
The CAD strengthened against the USD for a second day as stocks gained and commodities climbed, increasing investors’ appetite for higher- yielding assets. And the JPY rose to a new multi-week high against the USD and a 13-day high versus the EUR and CHF as a fall in most Asian and European stock prices increased demand for currencies perceived as safe-havens.
The Treasury Department said that net overall capital inflows into the United States jumped to $133.5 billion in September from a revised inflow of $25.3 billion in the previous month. Treasury originally reported inflows of $10.2 billion for August. Net long-term capital inflows, excluding swaps, increased to $40.7 billion from a revised $34.2 billion inflow in the previous month.
On Wednesday’s economic calendar look for October Housing Starts and Building Permits, the Consumer Price Index, and the weekly Crude Inventories report.
Earnings scheduled for release on Wednesday include BJs Wholesale, Air France-KLM, the Limited Brands, Perry Ellis International, PetSmart, WorldGate Communications, and United Drug Plc.
Happy trading,
James Dicks
Wholesale prices rose less than expected in October as the weak economy keeps inflation pressures largely in check. The Labor Department said that the Producer Price Index rose 0.3 percent last month, after falling 0.6 percent in September. Analysts expected a 0.5 percent gain.
The EUR made its latest move above $1.50, effectively ignoring Fed Chairman Ben Bernanke that the U.S. central bank was attentive to the suggestion of "changes in the value of the dollar." ECB President Jean-Claude Trichet welcomed Bernanke's remarks and said the euro was never intended to be a reserve currency.
President Obama continues his visit to mainland China. In a Beijing news conference, the president said he welcomed China's commitment to "move toward a more market-oriented exchange rate over time," but he didn't clearly request Beijing to permit the yuan to appreciate. America’s trade deficit with China widened to a 10-month high in September, raising concern that the combination of a recovering U.S. economy and a fixed yuan exchange rate against the USD could worsen global imbalances.
The managing director of the International Monetary Fund, Dominique Strauss-Kahn, said that the yuan may be added to the basket of currencies that set the value of IMF monetary units called special drawing rights. Strauss-Kahn said the yuan could be added in a “while.” The move would require the currency to be market-based.
Also from Asia, the USD was supported in Asian trade after minutes from the Reserve Bank of Australia's November 3rd policy meeting affected the AUD. The RBA said the rate of its interest-rate hikes was "an open question," which pushed the country's currency lower against major rivals, including the USD.
The CAD strengthened against the USD for a second day as stocks gained and commodities climbed, increasing investors’ appetite for higher- yielding assets. And the JPY rose to a new multi-week high against the USD and a 13-day high versus the EUR and CHF as a fall in most Asian and European stock prices increased demand for currencies perceived as safe-havens.
The Treasury Department said that net overall capital inflows into the United States jumped to $133.5 billion in September from a revised inflow of $25.3 billion in the previous month. Treasury originally reported inflows of $10.2 billion for August. Net long-term capital inflows, excluding swaps, increased to $40.7 billion from a revised $34.2 billion inflow in the previous month.
On Wednesday’s economic calendar look for October Housing Starts and Building Permits, the Consumer Price Index, and the weekly Crude Inventories report.
Earnings scheduled for release on Wednesday include BJs Wholesale, Air France-KLM, the Limited Brands, Perry Ellis International, PetSmart, WorldGate Communications, and United Drug Plc.
Happy trading,
James Dicks
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