The Forex Daily Digest – January 18, 2010
Financial markets in the U.S. are closed today for the observance of the Martin Luther King day holiday. Investors will closely watch U.S. earnings this week, with financial services heavyweights Bank of America and Morgan Stanley expected to report on Wednesday, and results from Goldman Sachs due on Thursday. The USD and JPY fell in subdued Asian trading today, giving up earlier gains as investors delayed trading actively with the New York stock market closed for the holiday.
Analysts believe the EUR’s decline against the GBP may accelerate. Technical indicators gave a so-called sell signal for the EUR last week. The euro is weakening after European Central Bank President Jean-Claude Trichet said that the region’s economic outlook remains uncertain and said policy makers won’t rescue Greece as the country struggles to reduce its budget deficit. The pound gained versus the single currency last week on speculation the Bank of England will allow its bond-buying program to expire as the recovery takes hold.
The JPY fell from a four-week high against the EUR on speculation the Bank of Japan will extend its policy of keeping interest rates near zero and adding funds into the economy, diminishing the appeal of the currency.
Currency strategists are increasingly betting against the JPY after the carry trade lost money in December for the first time in 10 months. Analyst forecasts on the JPY against the USD varied from the mean by 9 cents at the end of last week, compared with 10 cents at the end of 2008. USD forecasts against the EUR also had a standard deviation of 9 cents last week, down from 12 cents. For the Swiss franc, the figure fell to 8 cents, from 11 cents. The Swiss National Bank’s key rate is 0.25 percent.
The CAD gained against the USD, trading near the highest point in three months, as crude oil, gold and copper increased and rising stock markets polished the appeal of currencies tied to economic growth. The CAD has gained 2.5 percent this month against the USD. The Bank of Canada meets tomorrow to determine interest rates.
The CHF rose to the strongest point in almost a week versus the EUR as traders tested Central Bank Chief Philipp Hildebrand’s vow to “resolutely prevent” an “excessive” strengthening of the currency. The CHF had its biggest monthly gain against the EUR in a year during December as traders bet the central bank had relaxed its resistance to a stronger currency. The CHF ended three days of advances after Hildebrand said the SNB will “monitor foreign-exchange market developments very closely.”
There are no major economic reports on the economic calendar until Wednesday when we’ll see Building Permits, the Producer Price Index, and Crude Inventories. Scheduled earnings tomorrow include Citigroup, IBM, CSX Corp, Forest Labs, PetMed Express, Mercantile Bank Corp, and TD Ameritrade Holding Corp.
Happy Trading,
James Dicks
Analysts believe the EUR’s decline against the GBP may accelerate. Technical indicators gave a so-called sell signal for the EUR last week. The euro is weakening after European Central Bank President Jean-Claude Trichet said that the region’s economic outlook remains uncertain and said policy makers won’t rescue Greece as the country struggles to reduce its budget deficit. The pound gained versus the single currency last week on speculation the Bank of England will allow its bond-buying program to expire as the recovery takes hold.
The JPY fell from a four-week high against the EUR on speculation the Bank of Japan will extend its policy of keeping interest rates near zero and adding funds into the economy, diminishing the appeal of the currency.
Currency strategists are increasingly betting against the JPY after the carry trade lost money in December for the first time in 10 months. Analyst forecasts on the JPY against the USD varied from the mean by 9 cents at the end of last week, compared with 10 cents at the end of 2008. USD forecasts against the EUR also had a standard deviation of 9 cents last week, down from 12 cents. For the Swiss franc, the figure fell to 8 cents, from 11 cents. The Swiss National Bank’s key rate is 0.25 percent.
The CAD gained against the USD, trading near the highest point in three months, as crude oil, gold and copper increased and rising stock markets polished the appeal of currencies tied to economic growth. The CAD has gained 2.5 percent this month against the USD. The Bank of Canada meets tomorrow to determine interest rates.
The CHF rose to the strongest point in almost a week versus the EUR as traders tested Central Bank Chief Philipp Hildebrand’s vow to “resolutely prevent” an “excessive” strengthening of the currency. The CHF had its biggest monthly gain against the EUR in a year during December as traders bet the central bank had relaxed its resistance to a stronger currency. The CHF ended three days of advances after Hildebrand said the SNB will “monitor foreign-exchange market developments very closely.”
There are no major economic reports on the economic calendar until Wednesday when we’ll see Building Permits, the Producer Price Index, and Crude Inventories. Scheduled earnings tomorrow include Citigroup, IBM, CSX Corp, Forest Labs, PetMed Express, Mercantile Bank Corp, and TD Ameritrade Holding Corp.
Happy Trading,
James Dicks
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