The Forex Daily Digest – January 19, 2010
The EUR lost ground as German investor sentiment deteriorated while relentless concern over Greece’s finances kept the pressure on the currency. Against the USD, the EUR dropped below its 200-day moving average around $1.4285. It also fell to a one-month low against the JPY and a four-month low against sterling after Kraft Foods agreed to buy Britain's Cadbury Plc, increasing demand for GBPs.
The CAD fell as the nation’s central bank promised to leave the benchmark interest rate at a record low, 0.25 percent, through June, falling from almost a three-month high as the USD gained against all of its 16 major counterparts on less risk demand. The CAD briefly pared losses earlier after a Statistics Canada report showed the nation’s index of leading economic indicators posted its biggest gain in almost 27 years on household spending, housing and stock market gains.
Royal Bank of Scotland Group Plc said the EUR’s relevance as a reserve currency may be diminished the by the sovereign risks in the region. One FOREX analyst said that “the problems in Greece will be much harder for the market to gloss over this year and there is not a solution which appears good for the euro.” He said that either the “core countries” come to its assistance, which spreads the risk across the euro zone and sends a bad message to other member states. Or they cut Greece loose, which triggers massive risk of default.
A Hong Kong securities group is reporting today that China may allow its currency to increase from the second quarter as inflation accelerates in the world’s third-largest economy because of higher global commodity prices. Speculation is that China may allow the yuan to appreciate and raise interest rates before the “middle of the second quarter.
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, lessening the appeal of the currency. The JPY weakened against 15 of its 16 major counterparts after the BOJ Governor said the central bank will continue with its policy of fighting deflation.
The AUD increased slightly against the USD in Asia today, though technical factors weighed on the currency. A relatively sluggish day of currency trading in Australia picked up in late trading as selling pressure weighed on the AUD. Weaker equity markets around the region, due in part to a rise in China bill rates, also weakened the Australian dollar.
Freddie Mac said it sold $3 billion of bills at lower rates and mixed demand compared with last week's sale of the same maturities and amounts. Freddie Mac said it sold $1.5 billion of three-month bills due April 19, 2010 at a 0.068 percent stop-out rate, down from 0.079 percent for $1.5 billion bills auctioned a week earlier.
On the economic calendar for Wednesday, watch for December Building Permits, Housing Starts for December, and the Producer Price Index for December. On the earnings calendar, Bank of America, Morgan Stanley, Coach, State Street, US Bancorp, Wells Fargo, eBay, Seagate Technology, Starbucks and Xilinx.
Happy trading,
James Dicks
The CAD fell as the nation’s central bank promised to leave the benchmark interest rate at a record low, 0.25 percent, through June, falling from almost a three-month high as the USD gained against all of its 16 major counterparts on less risk demand. The CAD briefly pared losses earlier after a Statistics Canada report showed the nation’s index of leading economic indicators posted its biggest gain in almost 27 years on household spending, housing and stock market gains.
Royal Bank of Scotland Group Plc said the EUR’s relevance as a reserve currency may be diminished the by the sovereign risks in the region. One FOREX analyst said that “the problems in Greece will be much harder for the market to gloss over this year and there is not a solution which appears good for the euro.” He said that either the “core countries” come to its assistance, which spreads the risk across the euro zone and sends a bad message to other member states. Or they cut Greece loose, which triggers massive risk of default.
A Hong Kong securities group is reporting today that China may allow its currency to increase from the second quarter as inflation accelerates in the world’s third-largest economy because of higher global commodity prices. Speculation is that China may allow the yuan to appreciate and raise interest rates before the “middle of the second quarter.
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, lessening the appeal of the currency. The JPY weakened against 15 of its 16 major counterparts after the BOJ Governor said the central bank will continue with its policy of fighting deflation.
The AUD increased slightly against the USD in Asia today, though technical factors weighed on the currency. A relatively sluggish day of currency trading in Australia picked up in late trading as selling pressure weighed on the AUD. Weaker equity markets around the region, due in part to a rise in China bill rates, also weakened the Australian dollar.
Freddie Mac said it sold $3 billion of bills at lower rates and mixed demand compared with last week's sale of the same maturities and amounts. Freddie Mac said it sold $1.5 billion of three-month bills due April 19, 2010 at a 0.068 percent stop-out rate, down from 0.079 percent for $1.5 billion bills auctioned a week earlier.
On the economic calendar for Wednesday, watch for December Building Permits, Housing Starts for December, and the Producer Price Index for December. On the earnings calendar, Bank of America, Morgan Stanley, Coach, State Street, US Bancorp, Wells Fargo, eBay, Seagate Technology, Starbucks and Xilinx.
Happy trading,
James Dicks
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