The Forex Daily Digest – September 11, 2009
The USD fell for a fourth straight day, again hitting its lowest levels in a year, as stocks held on to small gains after a U.S. report that showed a drop in jobless claims. The Labor Department reported that the number of people filing for state unemployment benefits fell 26,000 to a seasonally adjusted 550,000 last week, which is the lowest since mid-July. The four-week average of new claims also fell, down 2,750 to 500,000.
The JPY rose against the EUR and the USD before a government report that economists say will show U.K. industrial production grew in July at a slower pace, boosting demand for Japan’s currency as a refuge. The British pound dropped against the yen for a second day amid speculation the Bank of England this week will expand its asset-purchase program, adding to signs the economic recovery will be sluggish.
The NZD rose to a one-year high and the AUD advanced as an increase in U.S. stock markets encouraged demand for higher- yielding assets. Earlier, the AUD fell as employers cut almost twice as many jobs last month as economists forecast, easing pressure on the central bank to raise interest rates. New Zealand’s central bank kept its benchmark interest rate unchanged at a record low of 2.5 percent. Meantime, the GBP and the CAD advanced after the Bank of England and the Bank of Canada both kept interest rates unchanged.
As expected, the Bank of England’s rate-setting Monetary Policy Committee also voted to leave its key lending rate unchanged at 0.5% and announced no change in its 175 billion pound ($290 billion) quantitative-easing program. Minutes of the meeting will be released on Sept. 23rd.
The Bank of Canada kept its target for the overnight rate at 0.25% and repeated its commitment to keep it there until the end of the second quarter of 2010, conditional on the outlook for inflation. Growth in the second half of 2009 could be stronger than the central bank predicted back in July. But overall risk to the bank's inflation forecasts remain slightly tilted to the downside.
An economist in Toronto said he believes the CAD may reach parity with its U.S. counterpart by year-end as economic growth in Asia boosts commodity prices. The CAD may strengthen as rising unemployment in the U.S. forces the government to adopt additional stimulus measures, further weakening the American currency. The CAD reached parity with the USD in September 2007 for the first time in three decades.
There are a number of economic reports to end the week; look for August Import/Export Prices, Wholesale Inventories for July, the preliminary University of Michigan Consumer Sentiment report for September and the Treasury Budget numbers for August.
Happy Trading,
James Dicks
The JPY rose against the EUR and the USD before a government report that economists say will show U.K. industrial production grew in July at a slower pace, boosting demand for Japan’s currency as a refuge. The British pound dropped against the yen for a second day amid speculation the Bank of England this week will expand its asset-purchase program, adding to signs the economic recovery will be sluggish.
The NZD rose to a one-year high and the AUD advanced as an increase in U.S. stock markets encouraged demand for higher- yielding assets. Earlier, the AUD fell as employers cut almost twice as many jobs last month as economists forecast, easing pressure on the central bank to raise interest rates. New Zealand’s central bank kept its benchmark interest rate unchanged at a record low of 2.5 percent. Meantime, the GBP and the CAD advanced after the Bank of England and the Bank of Canada both kept interest rates unchanged.
As expected, the Bank of England’s rate-setting Monetary Policy Committee also voted to leave its key lending rate unchanged at 0.5% and announced no change in its 175 billion pound ($290 billion) quantitative-easing program. Minutes of the meeting will be released on Sept. 23rd.
The Bank of Canada kept its target for the overnight rate at 0.25% and repeated its commitment to keep it there until the end of the second quarter of 2010, conditional on the outlook for inflation. Growth in the second half of 2009 could be stronger than the central bank predicted back in July. But overall risk to the bank's inflation forecasts remain slightly tilted to the downside.
An economist in Toronto said he believes the CAD may reach parity with its U.S. counterpart by year-end as economic growth in Asia boosts commodity prices. The CAD may strengthen as rising unemployment in the U.S. forces the government to adopt additional stimulus measures, further weakening the American currency. The CAD reached parity with the USD in September 2007 for the first time in three decades.
There are a number of economic reports to end the week; look for August Import/Export Prices, Wholesale Inventories for July, the preliminary University of Michigan Consumer Sentiment report for September and the Treasury Budget numbers for August.
Happy Trading,
James Dicks
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