The Forex Daily Digest – December 14, 2009
The USD advanced against the EUR, JPY and other major currencies to finish the week, pushing it to the highest in two months, after a marked uptick in consumer sentiment bolstered expectations of a U.S. economic recovery. Data showing U.S. retail sales jumped more than twice as much as expected in November turned the dollar higher, reversing losses notched during European and Asian trading hours.
The USD is expected to continue recent gains this week due to optimism that the U.S. economy may improve enough to encourage the Federal Reserve to raise interest rates sooner than most anticipate. Any further gains may center on comments out of the Fed this week when it makes its policy statement on Wednesday. The Fed isn't expected to raise interest rates, but some investors believe it might respond to strong economic data by hinting of an end to current extremely stimulative conditions.
The EUR rallied after Abu Dhabi pledged to bail out Dubai, easing concern that Europe’s biggest banks will suffer writedowns on loans in the Gulf emirate. The EUR increased most against the Taiwanese and Canadian dollars, while the GBP pared its declines as stocks rebounded after Dubai said it will use some of the funds to pay “trade creditors and contractors as well as meet interest expenses and company working capital.”
The CAD fell for the first week in three as crude oil, the nation’s biggest export, plunged and the central bank reiterated a conditional commitment to leave borrowing costs low. The CAD declined against four of its most- traded counterparts, including the USD and NZD and the JPY, as crude dropped for the third straight week, touching a two-month low. The CAD fell even though trade and building data beat forecasts.
Business morale in Japan improved more slowly in the fourth quarter while manufacturers by the Bank of Japan say they plan record cuts in capital spending, as a strong JPY threatens the fragile Japanese economy. The Tankan Survey also showed lending to both large and small businesses barely improved from the previous survey.
Senate Majority Leader Harry Reid urged Chinese President Hu Jintao to address his country's huge trade imbalance with the United States through a "significant revaluation" of China's currency. Many U.S. lawmakers believe China has deliberately undervalued its currency against the USD to give Chinese companies an unfair advantage in international trade. Some congressional members are backing legislation aimed primarily at China that would allow the U.S. to attach duties on goods from countries with undervalued currencies.
On the U.S. economic calendar on Tuesday watch for the Producer Price Index, the Empire State Manufacturing survey, Capacity Utilization, and Industrial Production. Scheduled earnings include Adobe Systems, Best Buy, Mittel, Renovo Group, Plc, and the Scott Wilson Group.
Happy Trading,
James Dicks
The USD is expected to continue recent gains this week due to optimism that the U.S. economy may improve enough to encourage the Federal Reserve to raise interest rates sooner than most anticipate. Any further gains may center on comments out of the Fed this week when it makes its policy statement on Wednesday. The Fed isn't expected to raise interest rates, but some investors believe it might respond to strong economic data by hinting of an end to current extremely stimulative conditions.
The EUR rallied after Abu Dhabi pledged to bail out Dubai, easing concern that Europe’s biggest banks will suffer writedowns on loans in the Gulf emirate. The EUR increased most against the Taiwanese and Canadian dollars, while the GBP pared its declines as stocks rebounded after Dubai said it will use some of the funds to pay “trade creditors and contractors as well as meet interest expenses and company working capital.”
The CAD fell for the first week in three as crude oil, the nation’s biggest export, plunged and the central bank reiterated a conditional commitment to leave borrowing costs low. The CAD declined against four of its most- traded counterparts, including the USD and NZD and the JPY, as crude dropped for the third straight week, touching a two-month low. The CAD fell even though trade and building data beat forecasts.
Business morale in Japan improved more slowly in the fourth quarter while manufacturers by the Bank of Japan say they plan record cuts in capital spending, as a strong JPY threatens the fragile Japanese economy. The Tankan Survey also showed lending to both large and small businesses barely improved from the previous survey.
Senate Majority Leader Harry Reid urged Chinese President Hu Jintao to address his country's huge trade imbalance with the United States through a "significant revaluation" of China's currency. Many U.S. lawmakers believe China has deliberately undervalued its currency against the USD to give Chinese companies an unfair advantage in international trade. Some congressional members are backing legislation aimed primarily at China that would allow the U.S. to attach duties on goods from countries with undervalued currencies.
On the U.S. economic calendar on Tuesday watch for the Producer Price Index, the Empire State Manufacturing survey, Capacity Utilization, and Industrial Production. Scheduled earnings include Adobe Systems, Best Buy, Mittel, Renovo Group, Plc, and the Scott Wilson Group.
Happy Trading,
James Dicks
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