The Forex Daily Digest – September 14, 2009
The USD fell to new lows on Friday, after strong data on U.S. confidence followed Chinese economic news and boosted investors' appetite for riskier assets. A growing group of analysts also speculated that investors may be returning to trades using the USD as a funding currency to buy higher-yielding assets, known as carry trades. Meantime, currency speculators raised their bets against the USD in the latest week to the most since at least mid-July of last year.
From a week ago, the USD lost about 1.3% against the Japanese yen. The JPY's strength came as a deviation from risk-appetite plays, which have tended to see traders shun the Japanese unit as well as the USD. The GBP traded at $1.6685, up from around $1.6668 late Thursday. The pound gained 1.6% against the USD last week.
The CAD posted a second consecutive weekly gain as crude oil rose and the benchmark U.S. stock index touched the highest this year, shining up the appeal of currencies tied to growth. The CAD appreciated 1.2 percent since Sept. 4th, which is the biggest weekly gain since mid-August. Canadian policy makers also expressed concern that “persistent” currency strength is a risk to economic recovery. Canadian Finance Minister Jim Flaherty said that the government has “limited” tools to deal with the loonie’s appreciation.
There were fresh signs at the end of last week that both Russia and China will slowly take steps to weaken the USD role in their currency reserves, adding to pressure on a U.S. unit battered by a changing global economic balance. And according to the central bank First Deputy Chairman Alexei Ulyukayev, Russia, which has already cut the USD’s share in its reserves to fewer than 50 percent, would like to include another two or three currencies in its investments.
The Obama administration said it will impose stiff tariffs on imports of Chinese-made tires after finding that a surge of imports has disrupted the U.S. domestic market. President Obama signed an order on Friday to impose the special punitive tariffs for three years. The action is the first major trade enforcement action of his presidency and comes less than two weeks before a high-profile summit of the leaders of the Group of 20 nations, including China.
This week look for a wide range of economic reports including the Producer Price Index for August and Retail Sales for August. U.S. retail sales got a very large, but temporary increase in August from the government's cash-for-clunkers deal so the numbers could be skewed a bit. Other data to be released in the coming week are expected to show that the production of factory goods and houses increased in August, while consumer prices were probably up on higher gasoline prices. Look for the Empire State Index, Business Inventories, the Consumer Price Index, Capacity Utilization and Industrial Production. Also you can expect Building Permits, Housing Starts and the Philly Fed Index. These along with these you can expect the weekly Initial Jobless Claims and Oil Inventories.
As we approach the end of the second quarter earnings season, there are still a few major earnings on the calendar. Companies scheduled to release earnings numbers this week include Best Buy, Adobe Systems, The Kroger Company, CKE Restaurants, Oracle, FedEx, Palm, and Pier 1 Imports.
Happy Trading,
James Dicks
From a week ago, the USD lost about 1.3% against the Japanese yen. The JPY's strength came as a deviation from risk-appetite plays, which have tended to see traders shun the Japanese unit as well as the USD. The GBP traded at $1.6685, up from around $1.6668 late Thursday. The pound gained 1.6% against the USD last week.
The CAD posted a second consecutive weekly gain as crude oil rose and the benchmark U.S. stock index touched the highest this year, shining up the appeal of currencies tied to growth. The CAD appreciated 1.2 percent since Sept. 4th, which is the biggest weekly gain since mid-August. Canadian policy makers also expressed concern that “persistent” currency strength is a risk to economic recovery. Canadian Finance Minister Jim Flaherty said that the government has “limited” tools to deal with the loonie’s appreciation.
There were fresh signs at the end of last week that both Russia and China will slowly take steps to weaken the USD role in their currency reserves, adding to pressure on a U.S. unit battered by a changing global economic balance. And according to the central bank First Deputy Chairman Alexei Ulyukayev, Russia, which has already cut the USD’s share in its reserves to fewer than 50 percent, would like to include another two or three currencies in its investments.
The Obama administration said it will impose stiff tariffs on imports of Chinese-made tires after finding that a surge of imports has disrupted the U.S. domestic market. President Obama signed an order on Friday to impose the special punitive tariffs for three years. The action is the first major trade enforcement action of his presidency and comes less than two weeks before a high-profile summit of the leaders of the Group of 20 nations, including China.
This week look for a wide range of economic reports including the Producer Price Index for August and Retail Sales for August. U.S. retail sales got a very large, but temporary increase in August from the government's cash-for-clunkers deal so the numbers could be skewed a bit. Other data to be released in the coming week are expected to show that the production of factory goods and houses increased in August, while consumer prices were probably up on higher gasoline prices. Look for the Empire State Index, Business Inventories, the Consumer Price Index, Capacity Utilization and Industrial Production. Also you can expect Building Permits, Housing Starts and the Philly Fed Index. These along with these you can expect the weekly Initial Jobless Claims and Oil Inventories.
As we approach the end of the second quarter earnings season, there are still a few major earnings on the calendar. Companies scheduled to release earnings numbers this week include Best Buy, Adobe Systems, The Kroger Company, CKE Restaurants, Oracle, FedEx, Palm, and Pier 1 Imports.
Happy Trading,
James Dicks
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