The Forex Daily Digest - June 16, 2009

The U.S. dollar lost a bit of ground early today after a couple of days of solid advances, showing a some weakness against major currencies after the Bank of Japan issued an improved economic outlook and a measure of German investor confidence increased.

Also int he news today, Russia plans to ask for a cautious approach to any changes in global reserve currencies as leaders of Brazil, Russia, India and China - the so-called BRIC nations - meet in Russia. A top aide to Russian President Dmitry Medvedev said there was an appreciation that the last thing needed at the present time was “turmoil on financial markets.” He said, "No one wants to ruin the dollar, including us."

Yesterday, the European Central Bank warned that the stability of the euro-zone's financial sector continues to be exposed, forcing its banks to maintain sufficient capital and liquidity safeguards in the event of continued global financial trauma. The report placed increased strain on the euro with the currency slipping below the $1.38 level versus the USD in Monday’s trading. In recent action, the single currency traded near $1.3771, which is a loss of 1.7% on the day.

Citing technical patterns, Citigroup issued a report this morning warning traders to sell the euro against the dollar as the common European currency follows gold lower.

The pound increased from a one-week low against the USD after an economic report that showed British inflation slowed down a bit in May, but less than economists predicted, making it more likely the Bank of England will start to raise interest rates. Sterling also advanced against the Swiss franc after the Office for National Statistics announced that consumer prices rose an annual 2.2 percent last month, compared with 2.3 percent in April. The rate was forecast to drop to 2 percent.

In the U.S., it was a very busy economic day today. The government reported that wholesale prices jumped slightly in May, but the increase was less than expected and the 5% annual rate of decline was the steepest since 1949. The Producer Price Index, which tracks the changes in selling prices for domestic producers, rose by 0.2% last month. The consensus estimate had forecast a 0.6% increase. And the U.S. government reported that Housing Starts were up by a huge 17.2 percent in May while Building Permits were up four percent.

One thing is for sure – there’s never a lack of news affecting the Foreign Currency markets around the world. Whether it’s fundamental international events of the day or the economic posturing of the major world capitals, the Forex is constantly being affected by various actions. Watch your charts, listen to the trading professionals on JDfn and then make your choices. This is an exciting time; make sure you are prepared when the charts start to move.

Happy Trading

James Dicks