The Forex Daily Digest – January 22, 2010
The USD fell against the EUR, ending six days of advances, over concern that a U.S. proposal to restrain trading by financial institutions will discourage investors from buying assets in the world’s largest economy. The USD dropped from the strongest level since July against the EUR. The JPY headed for a second weekly gain against its 16 major counterparts as stocks fell around the world, boosting demand for the currency as a refuge.
The GBP fell against the EUR after a report showed U.K. retail sales grew less than forecast last month and Britain’s main opposition party said it supported a U.S. proposal to rein in banks’ risk-taking. The GBP’s second straight drop trimmed its advance against the EUR this year to 1.7 percent. December retail sales rose 0.3 percent from November, below the 1.1 percent gain that was forecast by economists.
The JPY advanced against the USD and the EUR as a break of key support triggered stop-loss sales, while risk appetite in general suffered on the White House's proposals to regulate U.S. banks. High-yielding and commodity-linked currencies such as the AUD and the NZD also fell against the JPY, partly based on the U.S. plan and still undermined by worries that China may further tighten monetary policy in the coming weeks.
Other Asian currencies fell this week, led by South Korea’s won and the Indonesian rupiah, on speculation China will take more steps to curb inflation after the economy rebounded at a faster pace than analysts forecast last quarter. The Chinese central bank has guided short-term bill yields higher and increased the amount of funds banks must set aside as reserves this month to drain funds from the financial system.
The CAD hit the weakest level this year against the USD as a government report showed retail sales fell in November for the first time in four months. The CAD has fallen 2.5 percent since the middle of January in what would be the worst weekly performance since the five days ended Oct. 30. The Bank of Canada restated this week its conditional pledge to leave the target lending rate at a record low 0.25 percent until the end of June.
The Bank of Canada Governor Mark Carney said that Canada's economy is on track to recover this year and the outlook has improved since October, while giving few hints on how soon it will start raising record-low interest rates. And the Bank of Japan is expected to say that there is less chance the country will slip back into recession, but it remains ready to ease policy again in future to appease the government if the economy takes a turn for the worse.
On the U.S. economic calendar next week watch for Existing Home Sales, the Case-Schiller Home Index, Consumer Confidence, FHFA Home Price Index, New Home Sales, Durable Goods Orders, Gross Domestic Product, Chain Deflator, Employment Cost Index, the Chicago PMI and the University of Michigan Consumer Sentiment report.
Some of the scheduled major earnings next week include Halliburton, Quest Diagnostics, Apple, Texas Instruments, Delta Air Lines, DuPont, Johnson & Johnson, McGraw-Hill, U.S. Steel, Yahoo!, Boeing, General Dynamics, Hershey, Conoco Philips, Caterpillar, UAL Corp, 3M, AT&T, Bristol Meyers, Colgate Palmolive, Ford, Procter & Gamble, Chevron and Microsoft.
Happy trading,
James Dicks
The GBP fell against the EUR after a report showed U.K. retail sales grew less than forecast last month and Britain’s main opposition party said it supported a U.S. proposal to rein in banks’ risk-taking. The GBP’s second straight drop trimmed its advance against the EUR this year to 1.7 percent. December retail sales rose 0.3 percent from November, below the 1.1 percent gain that was forecast by economists.
The JPY advanced against the USD and the EUR as a break of key support triggered stop-loss sales, while risk appetite in general suffered on the White House's proposals to regulate U.S. banks. High-yielding and commodity-linked currencies such as the AUD and the NZD also fell against the JPY, partly based on the U.S. plan and still undermined by worries that China may further tighten monetary policy in the coming weeks.
Other Asian currencies fell this week, led by South Korea’s won and the Indonesian rupiah, on speculation China will take more steps to curb inflation after the economy rebounded at a faster pace than analysts forecast last quarter. The Chinese central bank has guided short-term bill yields higher and increased the amount of funds banks must set aside as reserves this month to drain funds from the financial system.
The CAD hit the weakest level this year against the USD as a government report showed retail sales fell in November for the first time in four months. The CAD has fallen 2.5 percent since the middle of January in what would be the worst weekly performance since the five days ended Oct. 30. The Bank of Canada restated this week its conditional pledge to leave the target lending rate at a record low 0.25 percent until the end of June.
The Bank of Canada Governor Mark Carney said that Canada's economy is on track to recover this year and the outlook has improved since October, while giving few hints on how soon it will start raising record-low interest rates. And the Bank of Japan is expected to say that there is less chance the country will slip back into recession, but it remains ready to ease policy again in future to appease the government if the economy takes a turn for the worse.
On the U.S. economic calendar next week watch for Existing Home Sales, the Case-Schiller Home Index, Consumer Confidence, FHFA Home Price Index, New Home Sales, Durable Goods Orders, Gross Domestic Product, Chain Deflator, Employment Cost Index, the Chicago PMI and the University of Michigan Consumer Sentiment report.
Some of the scheduled major earnings next week include Halliburton, Quest Diagnostics, Apple, Texas Instruments, Delta Air Lines, DuPont, Johnson & Johnson, McGraw-Hill, U.S. Steel, Yahoo!, Boeing, General Dynamics, Hershey, Conoco Philips, Caterpillar, UAL Corp, 3M, AT&T, Bristol Meyers, Colgate Palmolive, Ford, Procter & Gamble, Chevron and Microsoft.
Happy trading,
James Dicks
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