The Forex Daily Digest – November 27, 2009
The USD and the JPY lost some of their gains but remained higher against major rivals at the end of the week, benefiting from their safe-haven status in the face of mounting concerns over the potential financial fallout from Dubai's debt problems. The selling occurred as investor sentiment fell in the wake of news that Dubai World, the Gulf emirate's main conglomerate, asked creditors for a six-month stay on debt repayments of $59 billion.
Gold fell in New York and London as gains in the USD damped demand for the precious metal as an alternative asset. The U.S. Dollar Index extended its rebound from a 15-month low based on the news from Dubai. Gold futures, up 31 percent this year, are set for a ninth annual gain as central banks, pension funds and individual buyers seek to protect their assets from potential currency debasement and inflation.
In news from Asia today, Japanese Chief Cabinet Secretary Hirofumi Hirano said quick exchange rate moves are not desirable after the JPY rose to a 14-year high against the USD, falling short of calling for intervention to halt the gains. Japan’s biggest business lobby today called on Japan’s Prime Minister Yukio Hatoyama’s 10-week-old government to take measures to halt the yen’s rise, which is hurting the country’s exports.
A former advisor to the Chinese central bank said that China’s foreign-exchange reserves face a “triple whammy” as inflation; oversupply and the “inevitable” decline of the USD threaten to erode the value of its holdings of U.S. Treasuries. He said that China needs to divert its trade and investment surpluses away from U.S. debt if it is unable to reduce them.
European confidence in the economic outlook improved in November to the highest since the collapse of Lehman Brothers Holdings Inc., suggesting the recovery in the 16-member euro region is gathering strength. An index of executive and consumer sentiment rose for an eighth straight month to 88.8 from 86.1 in October. That was the highest since September 2008 and above the 88 projected by economists.
New Zealand lawmakers are planning to monitor the Reserve Bank Governor Alan Bollard’s plans to use new funding rules for banks to support monetary policy and potentially limit interest-rate increases. Bollard raised the benchmark interest rate to a record high in 2007 to counter a housing boom, buoying demand for the New Zealand currency and helping tip the economy into a recession.
The CAD neared a three-week low against the USD, extending losses in a risk-averse market that has been shaken by concern about Dubai's debt problems. Also dragging on the currency was sagging oil prices, nearly 5 percent towards $74 a barrel. Canada is a key exporter of oil and the resource's movements often provide direction for the CAD.
Next week’s economic calendar includes the Chicago PMI, the ISM Manufacturing and Services Index, Pending Home Sales, Auto and Truck Sales, Challenger Job Cuts, the ADP Unemployment report, the Fed Beige Book, Productivity, Factory Orders, as well as the Nonfarm Payroll report, the Unemployment Rate and Hourly Earnings.
On the earnings calendar watch for Staples, Aerospostale, Casella Waste Systems, Jo-Ann Stores, Sea Change International, Del Monte Foods, Novell, National Bank of Canada, Toll Brothers, and the Royal Bank of Scotland.
Happy Trading,
James Dicks
Gold fell in New York and London as gains in the USD damped demand for the precious metal as an alternative asset. The U.S. Dollar Index extended its rebound from a 15-month low based on the news from Dubai. Gold futures, up 31 percent this year, are set for a ninth annual gain as central banks, pension funds and individual buyers seek to protect their assets from potential currency debasement and inflation.
In news from Asia today, Japanese Chief Cabinet Secretary Hirofumi Hirano said quick exchange rate moves are not desirable after the JPY rose to a 14-year high against the USD, falling short of calling for intervention to halt the gains. Japan’s biggest business lobby today called on Japan’s Prime Minister Yukio Hatoyama’s 10-week-old government to take measures to halt the yen’s rise, which is hurting the country’s exports.
A former advisor to the Chinese central bank said that China’s foreign-exchange reserves face a “triple whammy” as inflation; oversupply and the “inevitable” decline of the USD threaten to erode the value of its holdings of U.S. Treasuries. He said that China needs to divert its trade and investment surpluses away from U.S. debt if it is unable to reduce them.
European confidence in the economic outlook improved in November to the highest since the collapse of Lehman Brothers Holdings Inc., suggesting the recovery in the 16-member euro region is gathering strength. An index of executive and consumer sentiment rose for an eighth straight month to 88.8 from 86.1 in October. That was the highest since September 2008 and above the 88 projected by economists.
New Zealand lawmakers are planning to monitor the Reserve Bank Governor Alan Bollard’s plans to use new funding rules for banks to support monetary policy and potentially limit interest-rate increases. Bollard raised the benchmark interest rate to a record high in 2007 to counter a housing boom, buoying demand for the New Zealand currency and helping tip the economy into a recession.
The CAD neared a three-week low against the USD, extending losses in a risk-averse market that has been shaken by concern about Dubai's debt problems. Also dragging on the currency was sagging oil prices, nearly 5 percent towards $74 a barrel. Canada is a key exporter of oil and the resource's movements often provide direction for the CAD.
Next week’s economic calendar includes the Chicago PMI, the ISM Manufacturing and Services Index, Pending Home Sales, Auto and Truck Sales, Challenger Job Cuts, the ADP Unemployment report, the Fed Beige Book, Productivity, Factory Orders, as well as the Nonfarm Payroll report, the Unemployment Rate and Hourly Earnings.
On the earnings calendar watch for Staples, Aerospostale, Casella Waste Systems, Jo-Ann Stores, Sea Change International, Del Monte Foods, Novell, National Bank of Canada, Toll Brothers, and the Royal Bank of Scotland.
Happy Trading,
James Dicks
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