The Forex Daily Digest – December 1, 2009
The USD remained modestly higher against the JPY after the Bank of Japan decided to make available 10 trillion yen for short-term loans to commercial banks in an effort to fight off deflationary pressures. The USD and the JPY were both lower against most major rivals, as investors rejected low-yielding currencies in favor of higher-yielding assets. Concerns over Dubai's debt problems faded and a gauge of manufacturing activity in China indicated the fastest pace of expansion in five years. The USD also declined against the EUR.
The CAD finished higher against the USD after numbers showed Canada officially exited recession and as risk appetite perked. The CAD eased from early highs after gross domestic product data for the third quarter came in below expectations. Statistics Canada reported annualized real growth in Gross Domestic Product (GDP) for the quarter of 0.4 percent, short of the market forecast for 0.7 percent growth.
The AUD rose against the USD after the central bank raised its benchmark interest rate for a third straight month. Reserve Bank Governor Glenn Stevens increased the overnight cash rate target to 3.75 percent from 3.5 percent in Sydney, as forecast by economists. The board won’t meet again until February. The nation’s currency fell after Stevens signaled he may now pause, saying the board’s “material adjustments” to borrowing costs are enough to keep inflation within his 2 percent to 3 percent target range.
The Bank of Japan offered banks more short-term funding following an emergency meeting, relieving government pressure on the central bank to help avoid another recession before upper house polls next year. Markets that are ready for a return to full quantitative easing reacted with disappointment over the decision to offer 10 trillion yen in three month funds at 0.1 percent. Analysts said the funds would do little to bring down deflation, although by lowering JPY lending rates they might restrain the currency's rally.
Europe’s unemployment rate held at the highest in more than a decade in October as companies cut jobs even after the economy emerged from the recession. The European Union statistics office said that unemployment in the 16-nation euro area remained at 9.8 percent after being revised higher to that level in September. That was the highest rate since December 1998 and in line with the consensus estimates of economists.
Gulf markets dropped again, taking little relief from Dubai World's plan to restructure about $26 billion of debt, while the rulers of Abu Dhabi and Dubai talked up their economic strength. Dubai equities fell 3.6 percent and the Abu Dhabi bourse lost 5.6 percent on their second trading day since Dubai asked creditors of Dubai World and its property arm for a six-month delay on debt repayments last week.
On the economic calendar Wednesday look for the Challenger Job Cuts report, the ADP Employment report, Crude Inventories for the week of November 27 and the Fed Beige Book.
Earnings scheduled for release on Wednesday include Casella Waste Systems, Aerospostale, Inc, SeaChange International, The Sage Group, and The Descartes Systems Group.
Happy Trading,
James Dicks
The CAD finished higher against the USD after numbers showed Canada officially exited recession and as risk appetite perked. The CAD eased from early highs after gross domestic product data for the third quarter came in below expectations. Statistics Canada reported annualized real growth in Gross Domestic Product (GDP) for the quarter of 0.4 percent, short of the market forecast for 0.7 percent growth.
The AUD rose against the USD after the central bank raised its benchmark interest rate for a third straight month. Reserve Bank Governor Glenn Stevens increased the overnight cash rate target to 3.75 percent from 3.5 percent in Sydney, as forecast by economists. The board won’t meet again until February. The nation’s currency fell after Stevens signaled he may now pause, saying the board’s “material adjustments” to borrowing costs are enough to keep inflation within his 2 percent to 3 percent target range.
The Bank of Japan offered banks more short-term funding following an emergency meeting, relieving government pressure on the central bank to help avoid another recession before upper house polls next year. Markets that are ready for a return to full quantitative easing reacted with disappointment over the decision to offer 10 trillion yen in three month funds at 0.1 percent. Analysts said the funds would do little to bring down deflation, although by lowering JPY lending rates they might restrain the currency's rally.
Europe’s unemployment rate held at the highest in more than a decade in October as companies cut jobs even after the economy emerged from the recession. The European Union statistics office said that unemployment in the 16-nation euro area remained at 9.8 percent after being revised higher to that level in September. That was the highest rate since December 1998 and in line with the consensus estimates of economists.
Gulf markets dropped again, taking little relief from Dubai World's plan to restructure about $26 billion of debt, while the rulers of Abu Dhabi and Dubai talked up their economic strength. Dubai equities fell 3.6 percent and the Abu Dhabi bourse lost 5.6 percent on their second trading day since Dubai asked creditors of Dubai World and its property arm for a six-month delay on debt repayments last week.
On the economic calendar Wednesday look for the Challenger Job Cuts report, the ADP Employment report, Crude Inventories for the week of November 27 and the Fed Beige Book.
Earnings scheduled for release on Wednesday include Casella Waste Systems, Aerospostale, Inc, SeaChange International, The Sage Group, and The Descartes Systems Group.
Happy Trading,
James Dicks
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