The Forex Daily Digest – January 12, 2010
The USD rose against higher- yielding currencies on speculation the global economy recovery may be slowing, spurring demand for the safety of the dollar. The USD gained the most against South Africa’s rand, the Norwegian krone and the South Korean won after an official at China’s sovereign wealth fund said he saw an end to the dollar’s recent decline. The AUD weakened for the first time in three days after a government report showed home- loan approvals declined more than economists forecast.
An official with China's sovereign wealth fund moved foreign-exchange rates after reported comments from a speech in Beijing that were dollar-bullish and yen- and gold-bearish. According to news reports, China Investment Corp. executive Peng Junming said that the USD was likely to appreciate from current levels, and that China and the U.S. were on track to raise interest rates in the second half of the year.
China took its strongest step towards tightening monetary policy as the world's third-largest economy roars ahead, surprising investors with an increase in banks' required reserves that rocked global financial markets. The move came just days after China reported robust trade figures and was the first time that the central bank had adjusted the ratio since a cut in December 2008, when it was loosening policy to cushion the economy from the global financial crisis.
The European Union's trade chief candidate called today for China to increase the value of its currency to reduce market imbalances and ultimately help the global economy recover. Karel De Gucht said China's "deliberate policy" to keep the yuan at a low level against the U.S. dollar and euro was "a major problem." An undervalued yuan allows Americans and European companies and customers to buy Chinese goods cheaply--adding to China's massive export flow--but makes it costly for Chinese buyers to import U.S. or European goods.
Japan’s current-account surplus widened for a fourth month in November as a rebound in global demand bolstered exports. Demand from Asia is helping companies from Toyota Motor Corp. to Komatsu Ltd. lead a recovery from the country’s worst postwar recession. Exporters got a boost last week when Finance Minister Naoto Kan said after his appointment that he favors a weaker JPY. Kan said last week that he wants the JPY to weaken “a bit more,” indicating he’s more sensitive than predecessor Hirohisa Fujii to exporters’ concerns at a soaring currency.
The CAD fell the most in almost two weeks after a report showed the nation unexpectedly posted a trade deficit in November, spurring speculation the economic recovery may not be as strong as investors hoped. The CAD depreciated against 12 of its 16 most- traded counterparts, losing the most against the JPY. The November deficit was C$344 million ($333 million), compared with a median forecast for a C$500 million surplus in a survey of economists.
Wednesday’s economic calendar includes the Crude Inventories report for the week of January 9, the December Treasury Budget figures and the Fed Beige Book. Scheduled earnings are Northwest Pipe, Clarcor, Douglas Holdings, Orleans Homebuilders, and Sealy.
Happy Trading,
James Dicks
An official with China's sovereign wealth fund moved foreign-exchange rates after reported comments from a speech in Beijing that were dollar-bullish and yen- and gold-bearish. According to news reports, China Investment Corp. executive Peng Junming said that the USD was likely to appreciate from current levels, and that China and the U.S. were on track to raise interest rates in the second half of the year.
China took its strongest step towards tightening monetary policy as the world's third-largest economy roars ahead, surprising investors with an increase in banks' required reserves that rocked global financial markets. The move came just days after China reported robust trade figures and was the first time that the central bank had adjusted the ratio since a cut in December 2008, when it was loosening policy to cushion the economy from the global financial crisis.
The European Union's trade chief candidate called today for China to increase the value of its currency to reduce market imbalances and ultimately help the global economy recover. Karel De Gucht said China's "deliberate policy" to keep the yuan at a low level against the U.S. dollar and euro was "a major problem." An undervalued yuan allows Americans and European companies and customers to buy Chinese goods cheaply--adding to China's massive export flow--but makes it costly for Chinese buyers to import U.S. or European goods.
Japan’s current-account surplus widened for a fourth month in November as a rebound in global demand bolstered exports. Demand from Asia is helping companies from Toyota Motor Corp. to Komatsu Ltd. lead a recovery from the country’s worst postwar recession. Exporters got a boost last week when Finance Minister Naoto Kan said after his appointment that he favors a weaker JPY. Kan said last week that he wants the JPY to weaken “a bit more,” indicating he’s more sensitive than predecessor Hirohisa Fujii to exporters’ concerns at a soaring currency.
The CAD fell the most in almost two weeks after a report showed the nation unexpectedly posted a trade deficit in November, spurring speculation the economic recovery may not be as strong as investors hoped. The CAD depreciated against 12 of its 16 most- traded counterparts, losing the most against the JPY. The November deficit was C$344 million ($333 million), compared with a median forecast for a C$500 million surplus in a survey of economists.
Wednesday’s economic calendar includes the Crude Inventories report for the week of January 9, the December Treasury Budget figures and the Fed Beige Book. Scheduled earnings are Northwest Pipe, Clarcor, Douglas Holdings, Orleans Homebuilders, and Sealy.
Happy Trading,
James Dicks
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