The Forex Daily Digest – January 28, 2010
The USD increased to the highest since July against the EUR, as investors around the globe signaled approval of the Federal Reserve's more upbeat outlook for the U.S. economy. The dollar rose against the euro yesterday after the Federal Reserve upgraded its economic outlook and reaffirmed it will end a $1.25 trillion program to buy mortgage-backed securities.
Kansas City Fed President Thomas Hoenig dissented from a reiteration of a pledge to keep borrowing costs at record lows for an “extended period.” In his State of the Union Address, President Obama called for an extension of tax incentives worth $38 billion over this year and next to spur businesses to accelerate equipment purchases. He also called for elimination of capital-gains taxes on small-business investments.
The EUR fell to the lowest level against USD and JPY in more than six months as Greece’s and Portugal’s budget crises spurred a retreat from riskier assets. European news reports said that any financial aid to Greece would be conditional upon the Greek government’s introduction of new measures to clean up the country’s public finances. Help would consist of bilateral loans from European governments in the absence of a mechanism for a euro-region bailout.
French President Nicolas Sarkozy has launched a wide-ranging attack on the structure of market capitalism at the World Economic Forum in Davos, Switzerland, saying currency exchange rates must be controlled and that the greed and irresponsibility of the system has not been tackled. He also announced that France wants to see "a new Bretton Woods" agreement to control exchange rates and the role of the USD. He said the issue would be "put on the agenda" when France chairs both the G8 and the G20 next year.
Canadian Prime Minister Stephen Harper warned against excessive regulation of the global financial sector. Addressing the World Economic Forum, he noted that higher regulatory standards in Canada meant its banks did not require bailouts. He said that if inadequate regulation in other countries was not addressed, "the consequences could actually be worse than before the crisis."
The U.S. Senate has opened debate on Fed Chairman Bernanke's nomination to serve a second term running the world's most powerful central bank, setting a procedural vote for later today with a final vote likely to follow. Bernanke, who has been credited with guiding the U.S. economy through a damaging financial crisis but who is also under fire for policies that set the stage for the turmoil, is expected to narrowly win confirmation, just days before his current four-year term expires on January 31.
On the Friday U.S. economic calendar watch for the advanced GDP report for the fourth quarter, the fourth quarter Chain Deflator, the Employment Cost Index and the Chicago PMI for January. Also scheduled for release is the University of Michigan’s Consumer Sentiment Report for January. Scheduled earnings reports include Chevron, Honeywell, Mattel, NuStar Energy, Provident Financial, and Fortune Brands.
Happy trading,
James Dicks
Kansas City Fed President Thomas Hoenig dissented from a reiteration of a pledge to keep borrowing costs at record lows for an “extended period.” In his State of the Union Address, President Obama called for an extension of tax incentives worth $38 billion over this year and next to spur businesses to accelerate equipment purchases. He also called for elimination of capital-gains taxes on small-business investments.
The EUR fell to the lowest level against USD and JPY in more than six months as Greece’s and Portugal’s budget crises spurred a retreat from riskier assets. European news reports said that any financial aid to Greece would be conditional upon the Greek government’s introduction of new measures to clean up the country’s public finances. Help would consist of bilateral loans from European governments in the absence of a mechanism for a euro-region bailout.
French President Nicolas Sarkozy has launched a wide-ranging attack on the structure of market capitalism at the World Economic Forum in Davos, Switzerland, saying currency exchange rates must be controlled and that the greed and irresponsibility of the system has not been tackled. He also announced that France wants to see "a new Bretton Woods" agreement to control exchange rates and the role of the USD. He said the issue would be "put on the agenda" when France chairs both the G8 and the G20 next year.
Canadian Prime Minister Stephen Harper warned against excessive regulation of the global financial sector. Addressing the World Economic Forum, he noted that higher regulatory standards in Canada meant its banks did not require bailouts. He said that if inadequate regulation in other countries was not addressed, "the consequences could actually be worse than before the crisis."
The U.S. Senate has opened debate on Fed Chairman Bernanke's nomination to serve a second term running the world's most powerful central bank, setting a procedural vote for later today with a final vote likely to follow. Bernanke, who has been credited with guiding the U.S. economy through a damaging financial crisis but who is also under fire for policies that set the stage for the turmoil, is expected to narrowly win confirmation, just days before his current four-year term expires on January 31.
On the Friday U.S. economic calendar watch for the advanced GDP report for the fourth quarter, the fourth quarter Chain Deflator, the Employment Cost Index and the Chicago PMI for January. Also scheduled for release is the University of Michigan’s Consumer Sentiment Report for January. Scheduled earnings reports include Chevron, Honeywell, Mattel, NuStar Energy, Provident Financial, and Fortune Brands.
Happy trading,
James Dicks
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