The Forex Daily Digest – January 15, 2010
The USD headed for a second weekly decline on speculation the Federal Reserve will keep interest rates near zero to aid the U.S. economic recovery. The USD gained against the EUR amid worries about Greece's fiscal situation and refuted rumors that German Chancellor Angela Merkel was preparing to resign. The dollar held onto those gains and others against major currencies as reports showed inflation was tame and an index on regional manufacturing improved.
Meantime, German Chancellor Merkel dismissed talk that she may resign as an "absurd" idea after rumors earlier in the day put the EUR under selling pressure. Merkel, who was reelected last September, said her possible resignation is such an outlandish idea that it doesn't need to be discussed further. The EUR remained under pressure, also taking a hit on worries about Greece's mounting deficit.
The CAD fell from the highest level since October against the USD as oil and gold fell and stock futures slipped on an increase in risk aversion, worsening the appeal of commodity-linked currencies. The CAD declined for the first time in three days as the USD rose against 15 of its 16 most-traded counterparts. The CAD gained 16 percent last year, and is up 2.6 percent this year on a rebound in prices for commodities such as crude, which account for about half the nation’s export revenue.
China charged the U.S. with “backsliding” toward protectionism and said companies must comply with foreign laws in the aftermath of Google Inc.’s threat to pull out of the country. A Chinese Ministry of Commerce spokesman said in Beijing today the U.S. use of trade remedies against China in 2009 was “unreasonable.” A U.S. State Department spokesman said the U.S. may take formal measures against China after Google said it was targeted by cyber attacks from the nation.
Japan’s central bank may see escalating political pressure to act against deflation as the government seeks to remove the threat of a recession relapse before a parliamentary election in July. Finance Minister Naoto Kan, in his second week in office, said that “there are still various policy measures that could be taken” by the Bank of Japan. He also praised the BOJ’s Dec. 1 introduction of a 10 trillion yen ($109 billion) loan program that came days after he expected more “monetary support” from the bank. He was economy minister at the time. Kan said that he will work with the BOJ to keep the JPY at an “appropriate” level, adding that he wants it to weaken “a bit more.”
The U.S. Federal Reserve's balance sheet rose to a record level in the latest week, boosted by its ongoing efforts to support the mortgage market. The Fed's balance sheet -- a broad gauge of its lending to the financial system -- rose to $2.274 trillion in the week ended January 13 from 2.216 trillion in the previous week.
On the economic calendar for the coming week expect Building Permits, Producer Price Index, Housing Starts, Crude Inventories, Leading Indicators, Philadelphia Fed Index. The activity on the earnings calendar picks up with scheduled reports from Citigroup, TD Ameritrade, CSX Corp, IBM, Bank of America, State Street, US Bancorp, Wells Fargo, eBay, Starbucks, AMR Corp, Fifth Third, Legg Mason, Goldman Sachs, Southwest Airlines, American Express, and Advanced Micro Devices.
Happy trading,
James Dicks
Meantime, German Chancellor Merkel dismissed talk that she may resign as an "absurd" idea after rumors earlier in the day put the EUR under selling pressure. Merkel, who was reelected last September, said her possible resignation is such an outlandish idea that it doesn't need to be discussed further. The EUR remained under pressure, also taking a hit on worries about Greece's mounting deficit.
The CAD fell from the highest level since October against the USD as oil and gold fell and stock futures slipped on an increase in risk aversion, worsening the appeal of commodity-linked currencies. The CAD declined for the first time in three days as the USD rose against 15 of its 16 most-traded counterparts. The CAD gained 16 percent last year, and is up 2.6 percent this year on a rebound in prices for commodities such as crude, which account for about half the nation’s export revenue.
China charged the U.S. with “backsliding” toward protectionism and said companies must comply with foreign laws in the aftermath of Google Inc.’s threat to pull out of the country. A Chinese Ministry of Commerce spokesman said in Beijing today the U.S. use of trade remedies against China in 2009 was “unreasonable.” A U.S. State Department spokesman said the U.S. may take formal measures against China after Google said it was targeted by cyber attacks from the nation.
Japan’s central bank may see escalating political pressure to act against deflation as the government seeks to remove the threat of a recession relapse before a parliamentary election in July. Finance Minister Naoto Kan, in his second week in office, said that “there are still various policy measures that could be taken” by the Bank of Japan. He also praised the BOJ’s Dec. 1 introduction of a 10 trillion yen ($109 billion) loan program that came days after he expected more “monetary support” from the bank. He was economy minister at the time. Kan said that he will work with the BOJ to keep the JPY at an “appropriate” level, adding that he wants it to weaken “a bit more.”
The U.S. Federal Reserve's balance sheet rose to a record level in the latest week, boosted by its ongoing efforts to support the mortgage market. The Fed's balance sheet -- a broad gauge of its lending to the financial system -- rose to $2.274 trillion in the week ended January 13 from 2.216 trillion in the previous week.
On the economic calendar for the coming week expect Building Permits, Producer Price Index, Housing Starts, Crude Inventories, Leading Indicators, Philadelphia Fed Index. The activity on the earnings calendar picks up with scheduled reports from Citigroup, TD Ameritrade, CSX Corp, IBM, Bank of America, State Street, US Bancorp, Wells Fargo, eBay, Starbucks, AMR Corp, Fifth Third, Legg Mason, Goldman Sachs, Southwest Airlines, American Express, and Advanced Micro Devices.
Happy trading,
James Dicks
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