The Forex Daily Digest – June 30, 2009

There was good news for the dollar this morning. The USD increased after China said the dollar may continue to control global trade and ruled out any “sudden” changes to its foreign-exchange reserves. Brazil, Russia, India and China are insisting they have a bigger say in the operation of global financial institutions. Russian and China, which has almost $2 trillion of foreign-exchange reserves, called for the creation of alternatives to the USD as a reserve currency.

The euro was little changed in the wake of the European Consumer Price Information. It traded at $1.4105 versus the dollar, up 0.2% on the day. Annual CPI across the euro zone was negative this month for the first time since records began 12 years ago. Annual CPI fell by 0.1%, the agency said in a preliminary estimate while economists predicted a slightly steeper decrease of 0.2%. The figure was far below the European Central Bank's annual CPI target of just under 2%. Central bank officials, including ECB President Jean-Claude Trichet, have been playing down the threat of deflation.

The GBP was bolstered against other major currencies, increasing to a 4-week high against the USD and a 2-week high against the JPY as Britain’s consumer confidence improved this month, encouraging the overall measure of confidence for the fourth time in five months. The GBP also moved higher against the currencies of Euro zone and Switzerland. Consumer confidence in Britain improved, with the index rising to a negative 25 from a negative 27 last month.

The JPY fell against the USD after the Japanese Trade Ministry reported that retail sales fell 2.8 percent in May from a year ago and industrial production increased 5.9 percent from April, when it had risen at the same rate.

The CAD was little changed against the USD as holidays in both countries later this week reduced trading activity. Currency traders say that this week will be set apart by terrible liquidity, as its holiday week on both sides of the border – Canada Day on July 1st and the Independence Day in the U.S. on July 4th.

The AUD and NZD dollars increased in value, expecting the best quarter against the USD in almost 25 years, as confidence that the global economic downturn may be easing a bit maintained the demand for higher-yielding assets. Both the AUD and the NZD strengthened for a sixth day against the USD as stocks advanced. Australia’s benchmark stock index, the All Ordinaries, gained for a fourth month after the nation’s second-biggest department store operator, raised its profit forecast as government stimulus measures encouraged consumer spending.

Economic reports today include the Case/Shiller Home Index, the Chicago PMI and the Consumer Confidence numbers released at 10 am (Eastern Time).

I hope you enjoy a profitable day trading the Forex market today. Make sure you tune into the JDfn Internet broadcasts to get all the information you can before making any trading decisions. And don’t forget to sign up for the Thursday, July 2nd, webinar with Adam Horak and learn how to trade the Non-Farm Payrolls report. Just call 1-800-785-7423, after hours select extension 305. Knowledge is power and in this case that could translate into extra dollars in your pocket. The more you know about trading the Forex the more profitable you can become. In the meantime, enjoy your day.

Happy Trading,

James Dicks