The Forex Daily Digest – February 4, 2010
The USD traded higher against the EUR after European Central Bank President Jean-Claude Trichet said the economic outlook is subject to “uncertainty.” The EUR fell most against the JPY after Trichet said some governments in the region have “sharply rising” deficits and should have a “strong focus” on reforms. The pound fell against the dollar after the Bank of England kept its option open to extend its bond-purchase program.
ECB President Trichet reiterated his message that a strong dollar is beneficial both for the United States economy and the world economy as a whole. Trichet told French television, "I appreciate that the authorities of the United States of America, Ben Bernanke and Tim Geithner, are saying that a strong dollar is in the interest of the U.S. economy. I would echo that, and I would say that I trust it is also in the interest of the global economy itself.” His comments come after the EUR has experienced a sharp decline of the past few weeks.
The USD could extend its gains against the JPY and the EUR a day before the U.S. nonfarm payrolls report, which is forecast to show the U.S. economy adding the most jobs in two years. The EUR also weaker against the USD after the European Commission approved Greece’s deficit-cutting program. European Union Monetary Affairs Commissioner Joaquin Almunia said there is no need for Greece to seek outside help in dealing with its fiscal crisis.
The Bank of England announced there would be no increase to its unprecedented 200 billion pound asset-buying program, stopping the economic plan after 11 months in a move that could indicate a return to more normal policy. It also left UK interest rates at a record low of 0.5 percent, as expected.
The GBP dropped versus the USD and government bonds rose as some traders gambled that the Bank of England may opt to lengthen its bond-purchase program to safeguard the economic recovery. Sterling also fell versus the JPY. Policy makers say they will maintain their main interest rate at a record low level.
The Chinese government has rejected President Obama’s comments that the yuan should appreciate, saying its currency has little impact on the U.S. trade deficit. Obama said he will pressure China on the currency to make sure U.S. goods are not artificially inflated in price and their goods aren’t deflated. The yuan has been pegged at about 6.83 per dollar since July 2008, and China has rejected calls from U.S. and European officials to let it appreciate. Meantime, a Chinese state researcher said China may allow the yuan resume appreciation as early as March to help tame inflation as exports increase.
The Labor Department reported that the number of Americans filing new claims for unemployment rose to 480,000 last week from a revised 472,000 the previous week; an unexpected increase of 8,000. December factory orders rose 1% versus forecasts for a rise of 0.5%. Orders rose 1% in the previous month.
On Friday’s economic calendar watch for the Nonfarm Payrolls report for January along with the Unemployment Rate, Average Workweek figures, Hourly Earnings and Consumer Credit. Scheduled earnings include Aetna, Pinnacle, Simon Properties, Kelly Services, Imperial Sugar, TECO Energy, Tyson Foods, and Weyerhaeuser.
Happy Trading,
James Dicks
ECB President Trichet reiterated his message that a strong dollar is beneficial both for the United States economy and the world economy as a whole. Trichet told French television, "I appreciate that the authorities of the United States of America, Ben Bernanke and Tim Geithner, are saying that a strong dollar is in the interest of the U.S. economy. I would echo that, and I would say that I trust it is also in the interest of the global economy itself.” His comments come after the EUR has experienced a sharp decline of the past few weeks.
The USD could extend its gains against the JPY and the EUR a day before the U.S. nonfarm payrolls report, which is forecast to show the U.S. economy adding the most jobs in two years. The EUR also weaker against the USD after the European Commission approved Greece’s deficit-cutting program. European Union Monetary Affairs Commissioner Joaquin Almunia said there is no need for Greece to seek outside help in dealing with its fiscal crisis.
The Bank of England announced there would be no increase to its unprecedented 200 billion pound asset-buying program, stopping the economic plan after 11 months in a move that could indicate a return to more normal policy. It also left UK interest rates at a record low of 0.5 percent, as expected.
The GBP dropped versus the USD and government bonds rose as some traders gambled that the Bank of England may opt to lengthen its bond-purchase program to safeguard the economic recovery. Sterling also fell versus the JPY. Policy makers say they will maintain their main interest rate at a record low level.
The Chinese government has rejected President Obama’s comments that the yuan should appreciate, saying its currency has little impact on the U.S. trade deficit. Obama said he will pressure China on the currency to make sure U.S. goods are not artificially inflated in price and their goods aren’t deflated. The yuan has been pegged at about 6.83 per dollar since July 2008, and China has rejected calls from U.S. and European officials to let it appreciate. Meantime, a Chinese state researcher said China may allow the yuan resume appreciation as early as March to help tame inflation as exports increase.
The Labor Department reported that the number of Americans filing new claims for unemployment rose to 480,000 last week from a revised 472,000 the previous week; an unexpected increase of 8,000. December factory orders rose 1% versus forecasts for a rise of 0.5%. Orders rose 1% in the previous month.
On Friday’s economic calendar watch for the Nonfarm Payrolls report for January along with the Unemployment Rate, Average Workweek figures, Hourly Earnings and Consumer Credit. Scheduled earnings include Aetna, Pinnacle, Simon Properties, Kelly Services, Imperial Sugar, TECO Energy, Tyson Foods, and Weyerhaeuser.
Happy Trading,
James Dicks
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