The Forex Daily Digest – November 24, 2009
The USD experienced its biggest fall in two weeks against major counterparts, after a Federal Reserve official's call to extend some of the central bank's stimulus measures suggested interest rates will remain low indefinitely. James Bullard, president of the Federal Reserve Bank of St. Louis, made the comments. He'll have a vote on the Fed panel charged with setting policy on U.S. interest rates next year. A broad-based stock rally continued Monday afternoon following rate-related comments from a central banker and strong housing data that put investors back in the mood to bet aggressively.
Also, European Central Bank President Jean-Claude Trichet said governments need to begin putting together detailed plans to exit stimulus measures once economic conditions improve. The central bank's extraordinary monetary-stimulus measures are set to phase out by design. The comments added to those made by other European officials discussing the withdrawal of stimulus measures, boosting expectations that the topic will be broached at the ECB meeting next month.
It was reported today that the U.S. economy expanded at a 2.8 percent annual rate in the third quarter, less than the government reported last month, reflecting a smaller gain in consumer spending and a bigger trade deficit. The increase in gross domestic product in the third quarter compares with a 3.5 percent gain, previously estimated.
Gold jumped to a record price as the slumping dollar enhanced bullion’s appeal as an alternative asset. Silver also gained yesterday. Gold futures touched an all-time high of $1,174 an ounce in New York, after the dollar fell as much as 0.9 percent against the euro. Gold has posted records during nine sessions this month, and is up 32 percent this year as investors and central banks increased their holdings of the metal to preserve wealth.
The EUR was higher against the USD, reversing earlier losses as a firmer-than-expected German sentiment survey offset concerns about the country's banking sector. Trading volumes were thin, with major currency pairs confined to their recent ranges ahead of the U.S. Thanksgiving holiday on Thursday.
Japanese cabinet ministers placed more pressure on the Bank of Japan to respond to deflation, with one saying the central bank was "asleep at the wheel". Last week, the government declared that Japan had entered its second bout of deflation in less than a decade, as a public battle brews between the administration and the BOJ over how to manage the economy.
The AUD advanced for the first time in five days as global stocks rose and gold climbed to a record. The NZD also gained. Australia’s currency appreciated versus the yen as traders increased bets that the Reserve Bank will raise interest rates for a record third month on Dec. 1. The USD fell against all of the 16 major currencies except the JPY on speculation the Federal Reserve will keep its stimulus measures in place.
Russia’s central bank cut its key interest rates to a record low in the ninth reduction since April as it attempts to discourage speculative gambles on the ruble and ease credit flows to households and businesses. Bank Rossii cut the refinancing rate to 9 percent from 9.5 percent and reduced the repurchase rate charged on central bank loans to 8 percent from 8.5 percent, effective from Nov. 25.
The CAD weakened against the USD as crude oil, the nation’s largest export, and global equities swung between gains and losses, diminishing the appeal of currencies tied to growth. Canada’s dollar was the third-worst performer against the dollar today, behind the dollars of fellow commodity exporters New Zealand and Australia.
The economic calendar will be busy trying to clear out the reports prior to the Thanksgiving holiday. On the calendar for Wednesday are the Personal Income and Spending report, PCE Prices, Initial Jobless Claims, Durable Goods, the revised University of Michigan Consumer Sentiment report, New Home Sales and the Crude Inventories report.
It will be a slow day on the earnings calendar. Scheduled to report on Wednesday include Deere & Company, the London Stock Exchange Plc, and Tiffany and Company.
Happy trading,
James Dicks
Also, European Central Bank President Jean-Claude Trichet said governments need to begin putting together detailed plans to exit stimulus measures once economic conditions improve. The central bank's extraordinary monetary-stimulus measures are set to phase out by design. The comments added to those made by other European officials discussing the withdrawal of stimulus measures, boosting expectations that the topic will be broached at the ECB meeting next month.
It was reported today that the U.S. economy expanded at a 2.8 percent annual rate in the third quarter, less than the government reported last month, reflecting a smaller gain in consumer spending and a bigger trade deficit. The increase in gross domestic product in the third quarter compares with a 3.5 percent gain, previously estimated.
Gold jumped to a record price as the slumping dollar enhanced bullion’s appeal as an alternative asset. Silver also gained yesterday. Gold futures touched an all-time high of $1,174 an ounce in New York, after the dollar fell as much as 0.9 percent against the euro. Gold has posted records during nine sessions this month, and is up 32 percent this year as investors and central banks increased their holdings of the metal to preserve wealth.
The EUR was higher against the USD, reversing earlier losses as a firmer-than-expected German sentiment survey offset concerns about the country's banking sector. Trading volumes were thin, with major currency pairs confined to their recent ranges ahead of the U.S. Thanksgiving holiday on Thursday.
Japanese cabinet ministers placed more pressure on the Bank of Japan to respond to deflation, with one saying the central bank was "asleep at the wheel". Last week, the government declared that Japan had entered its second bout of deflation in less than a decade, as a public battle brews between the administration and the BOJ over how to manage the economy.
The AUD advanced for the first time in five days as global stocks rose and gold climbed to a record. The NZD also gained. Australia’s currency appreciated versus the yen as traders increased bets that the Reserve Bank will raise interest rates for a record third month on Dec. 1. The USD fell against all of the 16 major currencies except the JPY on speculation the Federal Reserve will keep its stimulus measures in place.
Russia’s central bank cut its key interest rates to a record low in the ninth reduction since April as it attempts to discourage speculative gambles on the ruble and ease credit flows to households and businesses. Bank Rossii cut the refinancing rate to 9 percent from 9.5 percent and reduced the repurchase rate charged on central bank loans to 8 percent from 8.5 percent, effective from Nov. 25.
The CAD weakened against the USD as crude oil, the nation’s largest export, and global equities swung between gains and losses, diminishing the appeal of currencies tied to growth. Canada’s dollar was the third-worst performer against the dollar today, behind the dollars of fellow commodity exporters New Zealand and Australia.
The economic calendar will be busy trying to clear out the reports prior to the Thanksgiving holiday. On the calendar for Wednesday are the Personal Income and Spending report, PCE Prices, Initial Jobless Claims, Durable Goods, the revised University of Michigan Consumer Sentiment report, New Home Sales and the Crude Inventories report.
It will be a slow day on the earnings calendar. Scheduled to report on Wednesday include Deere & Company, the London Stock Exchange Plc, and Tiffany and Company.
Happy trading,
James Dicks
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