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Daily FX Market Outlook by AceTrader-2-8-2011

Discussion in 'Forex Daily News & Outlook' started by acetraderfx, Aug 1, 2011.

  1. acetraderfx

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    Market Review - 01/08/2011 21:51 GMT

    Swiss franc sets new highs on fears of global growth slowdown


    The Swiss franc rallied against the greenback and euro to fresh record highs on Monday on risk aversion as weak U.S. manufacturing data fanned worries about the pace of global economic growth, spurring demand for safe-haven currencies. The single currency also tumbled across its major counterparts.

    Versus the Swiss franc, the greenback recovered from last Friday's low of 0.7851 to 0.7952 in Asian morning. However, renewed selling sent the pair lower and price tumbled to a fresh lifetime low of 0.7734 on risk aversion after the release of weaker-than-expected U.S. ISM Manufacturing PMI (50.9 for July versus forecast of 54.9) before staging a recovery due to short-covering. Eur/chf also tumbled from 1.1452 to a fresh all-time low of 1.1030.

    Although the greenback rose strongly to an intra-day high at 78.05 against the Japanese yen after U.S. President Barack Obama said Republican & Democratic leaders had reached agreement to reduce the deficit and avoid default, dollar retreated to 77.42 on renewed risk aversion after the release of weaker than expected China manufacturing PMI data which came in at 50.7 in July, compared with 50.9 in June whilst HSBC's China PMI fell to 49.3 in July, the first time below 50.0 in a year. Later, renewed selling at 77.77 pressured the pair and price pierced through last Friday's low of 76.70 to a 4-1/2 month low of 76.29 after the release of weak U.S. ISM Manufacturing PMI. However, buying interest around March's record low at 76.25 limited downside and dollar rebounded to 77.28 in NY afternoon.

    The single currency edged higher from NZ low of 1.4411 after U.S. President Obama announced leaders fm both parties had reached a deal to raise the U.S. borrowing limit and avoid a calamitous default, rose to 1.4453 in European morning. However, euro retreated sharply from there due to the reversal of U.S. stocks and the pair dropped further to an intra-day low of 1.4185 on risk aversion after the release of weak U.S. ISM Manufacturing PMI but price recovered to 1.4273 in NY afternoon on short-covering. Active cross selling of euro also pressured the single currency as eur/jpy and eur/gbp tumbled from 112.25 to 108.75 and from 0.8805 to 0.8722 respectively.

    DJI initially surged 139 points on news of a debt limit hike but later tumbled below 12,000 due to weak U.S. manufacturing data but eventually closed the day at 12,132.49, down by 10.75 points. CAC-40 and DAX tumbled by 2.3% and 2.86% respectively.

    Despite the British pound's brief breach of last Friday's high of 1.6471 to 1.6477 in tandem with euro in Asian morning, cable dropped from 1.6466 to 1.6396 in European morning after the release of much weaker-than-expected UK PMI data which came in at 49.1 vs forecasts of 51.0 and the previous revised figure of 51.4. Despite sterling's recovery to 1.6458, the pair tumbled sharply with euro on risk aversions and pierced through last Friday's low of 1.6261 to 1.6238 in NY morning before recovering.

    Data to be released on Tuesday include:

    Australia House price index, Building Approvals, RBA rate decision, Swiss Retail sales, PMI, U.K. PMI construction, EU PPI, U.S. Personal consumption, Personal income, PCE core, PCE index.

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  2. acetraderfx

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    Market Review - 02/08/2011 21:57 GMT

    Swiss franc surges to fresh highs on concerns over global economic growth and debt level


    The Swiss franc rallied against the dollar and euro to fresh all-time highs Tuesday on risk aversion as investors were still worried about the global economic growth and debt levels in U.S. and Europe. The U.S. bill to increase the debt ceiling and reduce the deficit passed the Senate and was signed into law, narrowly avoiding the Aug. 2 deadline.

    Versus the Swiss franc, despite dollar's brief recovery to 0.7857, renewed selling sent the pair lower and price tumbled below Monday's low of 0.7733 to a fresh lifetime low of 0.7620 ahead of NY closing due to the selloff in global stock markets on increasing worries about weakness in U.S. economy. Eur/chf also plunged below 1.1030 to a fresh all-time low of 1.0820.

    DJI tumbled by 2.19% or 265.87 points and closed the day below 12,000 level at 11,866.62. FTSE-100, CAC-40 and DAX also tanked by 0.97%, 1.82% and 2.26% respectively.

    Versus the Japanese yen, the greenback extended Monday's rebound from 76.29 to 77.85 in Asian morning. However, lack of follow-through buying pressured the pair and price dropped to 77.17 in European morning due to active cross buying of yen (eur/jpy tumbled from 111.01 to 109.21). Later, usd/jpy fell marginally to 76.97 at NY midday after the release of weaker-than-expected U.S. personal consumption which came in at -0.2% vs forecast of 0.2%.

    Although the single currency climbed above Monday's NY high of 1.4273 to 1.4283 in Asian morning, renewed selling pressured the pair and price tumbled below Monday's low of 1.4185 to 1.4151 in NY morning due to active cross selling of euro. Despite euro's rebound to 1.4183 after weaker-than-expected U.S. June personal consumption together with active cross buying of euro vs gbp (eur/gbp rebounded from 0.8699 to 0.8770), the pair fell again to 1.4176 in NY afternoon due to the selloff in global stock markets on worries over the growth of U.S. economy.

    The British pound edged higher from Monday's NY low of 1.6238 to 1.6329 at European opening. However, cable then fell in tandem with euro and tanked below 1.6238 to 1.6224 in NY morning before staging a recovery to 1.6316 in NY afternoon.

    The Australian dollar fell from Asian high at 1.1008 and then tumbled sharply after RBA kept its target rate at 4.75% and said it 'remains concerned about the medium-term outlook for inflation.' Aud/usd eventually tanked to 1.0779 near NY closing.

    Spot gold surged by more than 2.0% to a fresh lifetime high at 1658.50 in NY afternoon on safe-haven buying due to the selloff of U.S. and European stocks.

    On the other news, rating agency Fitch said 'the deal reached is commensurate with AAA rating; agreement is clearly a step in the right direction; U.S. must also confront tough choices on tax and spending against a weak economic back drop.'

    Data to be released on Wednesday include:

    China Non-manufacturing PMI, HSBC Services PMI, Australia Retail sales, Germany Services PMI, EU Services PMI, U.K. Services PMI, BRC Shop Price Index, EU Retail sales, U.S. ADP employment, Durable goods (rev.), ex. Defense (rev.), ex. Transport (rev.), Factory orders, ISM non-manufacturing.

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    Market Review - 04/08/2011 22:38 GMT

    Yen tumbles on BoJ intervention


    The Japanese yen fell broadly against the greenback and other currencies on Thursday as Bank of Japan sold its currency to stem the yen's recent strength. The single currency tumbled sharply in NY morning as ECB President Jean-Claude Trichet said the ECB has resumed its bond-buying programme amid growing fears of EU debt crisis.

    Versus the Japanese yen, the greenback rallied sharply from 77.00 to 80.25 as the BoJ intervened unilaterally in the currency market in Asian and European sessions to weaken its currency by selling an estimated one trillion yen ($12.5 billion) against other counterparts. However, the pair retreated on long liquidation to 78.67 in NY midday after the release of U.S jobless claims data (400K vs the forecast of 405K and the previous revised reading of 401K) and then recovered in NY afternoon.

    In other news, BoJ decided to ease monetary policy further and kept the overnight call rate target unchanged at 0-0.1% by unanimous vote. BoJ also expanded its asset-purchase fund to 15 trillion yen from 10 trillion yen and increased a credit facility by 5 trillion yen to 35 trillion yen. The overnight call rate target remained at 0-0.1% by unanimous vote

    Although the single currency climbed above Wednesday's NY high of 1.4345 to 1.4370 in Australian morning, the pair retreated sharply to 1.4266 at Europe open on dollar's broad-based strength due to BoJ's solo intervention. Later, despite euro's recovery to 1.4331 due to cross buying of euro vs gbp, the single currency fell sharply to 1.4112 in NY morning after euro-negative comments from ECB President Jean-Claude Trichet together with the selloff of U.S. and European stocks market. The single currency later dropped further to 1.4098 near NY closing. Active cross selling of euro also pressured the single currency as eur/jpy and eur/chf retreated sharply from 114.15 to 111.29 and from 1.1139 to 1.0820 respectively.

    ECB President Jean-Claude Trichet held a press conference after ECB kept its benchmark interest rate at 1.5 percent and said the ECB has resumed purchases of government bonds and will offer banks more cash amid growing fears the eurozone debt crisis could engulf Italy and Spain.

    U.S. and European indices tumbled sharply on concerns about the global economy as DJI closed the day at 11383.68, down by 512.76 points or 4.31% and S&P tanked by 4.78%, the biggest 1-day drop since Feb 2009. FTSE 100, CAC 40, and DAX plunged by 3.43%, 3.90%, and 3.40%, respectively.

    The British pound extended Wednesday's rally from 1.6251 to 1.6439 in Australia. However, cable retreated sharply in tandem with euro in Asia on dollar's broad-based rebound due to BoJ's intervention and dropped to 1.6287 in European morning. Despite sterling's recovery to 1.6372 in NY morning, renewed selling pressured the pair and price fell further with euro to 1.6246 ahead of NY closing.

    Earlier in Europe, BoE left its key interest rate unchanged at 0.5% and maintained its 200 billion pound asset purchase programme.

    On the data front, German factory orders for June beat expectations, coming in at 1.8% m/m and 9.5% y/y versus forecasts of -0.5% and 6.7% respectively.

    Data to be released on Friday include:

    Japan Leading indicators, Swiss CPI, U.K. Halifax hse prices, PPI input, PPI output, PPI core, Germany Industrial prod'n, U.S. Avg. hourly earnings, Non-farm payrolls, Private Payrolls, Unemployment rate, Canada Building permits, Ivey PMI, Canada Unemployment rate, Employment change.

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    Market Review - 06/08/2011 01:09 GMT

    Euro surges on hopes of expanded ECB bond buying programme


    The single currency rallied on Friday's news that the ECB is likely to buy bonds from troubled Italy and Spain to reduce eurozone contagion risks and to restore investors' confidence. Better-than-expected U.S. jobs report data failed to ease worries about the global economy.

    Earlier, although euro extended Thursday's selloff to 1.4055 in Australia, the single currency ratcheted higher on short-covering in Asian and European sessions and rose to 1.4232 in NY morning after the release of better-than-expected U.S. jobs data. Later, despite euro's retreat to 1.4146, the pair surged to a session high of 1.4297 in NY afternoon on reports the ECB will buy Italian and Spanish sovereign bonds if they accelerate their fiscal reforms.

    U.S. July non-farm and private payrolls came in better-than-expected at 117K n 154K vs forecasts of 85K and 115K whilst the unemployment rate is 9.1% in July vs forecast of 9.2%. Average hourly earnings were up 0.4% m/m and 2.3% y/y vs expectations of 0.2% and 1.9%.

    Versus the Japanese yen, the greenback edged lower from 79.34 in Australia due to renewed cross buying of yen. Later, despite dollar's brief spike to as high as 79.41 on talks of interventions by Japanese authorities, the pair fell again to 78.31 as a Japanese senior official denied to give comment on whether Japan intervened in the currency market at Asian midday. Although usd/jpy rose to 79.08 after the release of better-than-expected U.S. jobs data, renewed selling pressured the pair down to around 78.50 in late NY session.

    Although the British pound continued its selloff in previous day to 1.6229 in Australia, cable ratcheted higher in tandem with euro on short-covering in Asian and European sessions and rallied to 1.6397 at NY midday due to cross buying gbp vs euro (eur/gbp rebounded strongly from 0.8643 to 0.8732) before retreating to 1.6334 in NY afternoon.

    Data to be released next week includes:

    Japan trade balance, current account, economic watch DI, BOJ monthly report, Swiss jobless rate, EU sentix investor confidence on Monday;

    UK BRC retail sales, RICS house prices, Australia NAB business confidence, China CPI, PPI, industrial production, retail sales, fixed assets investments urban, Japan consumer confidence, machine tool orders, Swiss consumer confidence, Germany export, import, trade balance, current account, UK industrial production, manufacturing production, trade balance, Canada housing starts, U.S. Fed rate decision on Tuesday;

    Japan domestic CGPI, Australia Westpac consumer confidence, China exports, imports, trade balance, Germany CPI final, HICP final, U.S. wholesale inventories, Fed budget on Wednesday;

    Japan machine orders, Australia employment change, unemployment rate, Canada new housing price index, trade balance, exports, imports, U.S. jobless claims on Thursday;

    Japan capacity utilisation, EU industrial production, U.S. retail sales, retail sales less auto, U. Michigan consumer sentiment survey, business inventories on Friday.

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  5. acetraderfx

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    Market Review - 10/08/2011 21:21 GMT

    Euro tumbles on concerns over French credit rating and bank woes


    The single currency tanked against most of its counterparts on Wednesday as investors were worried about a possible downgrade of France's AAA credit rating and its banks exposure to eurozone debt.

    The single currency traded sideways in Asian session, reaching a low of 1.4310 in European morning before staging a rebound above Australian high of 1.4398 to 1.4402. However, the pair retreated sharply on risk aversion together with the selloff in global stock markets on speculation that France will be the next AAA-rated country to be downgraded and extended its selloff to 1.4163 in NY morning on worries about French banks with large exposure to eurozone debt but euro staged a recovery to 1.4238 on short-covering in NY afternoon. Active cross selling also sent euro lower as eur/jpy and eur/gbp tumbled from 111.24 to 108.30 and from 0.8886 to 0.8760, respectively.

    The DJI closed the day at 10719.94, down by 4.62% or 519.83 points. The CAC 40, DAX, and FTSE 100 indicies tumbled by 5.45%, 5.13%, and 3.05%, respectively.

    The British pound extended its rally from Tuesday's NY low of 1.6176 to 1.6336 in Australia, however, it then ratcheted lower in tandem with euro in Asian morning. Despite cable's recovery to 1.6281 due to BoE Governor Mervyn King's speech, renewed selling pressured the pair to 1.6123 near NY closing.

    BoE Governor King said in a press conference after the release of quarterly inflation report that there is a 'limit to what U.K. monetary policy can do' and 'we can carry out more asset purchases but this is not for today.'

    Versus the Japanese yen, the greenback rose to 77.30 in Australian morning but then ratcheted lower throughout the day to a low of 76.35 in NY morning, only 10 pips above its post-WWII low. Later, dollar strongly rebounded to 76.92 on short-covering ahead of NY closing.

    Data to be released on Thursday include:

    Japan machinery orders, Australia employment change, unemployment rate, Germany WPI, EU monthly bulletin, U.S. jobless claims, trade balance, Canada new housing price index, trade balance, exports, imports.

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    Market Review - 11/08/2011 22:04 GMT

    Euro, dollar surge against franc as SNB considers euro peg


    The single currency and the greenback rose strongly against the Swiss franc on Thursday as the Swiss National Bank said it may peg the franc to euro to curb its strength. Usd/chf and eur/chf rallied by more than 400 points and 600 points to 0.7688 and 1.0920 respectively.

    Although the single currency rallied from 1.4122 (AUS) to 1.4275 in European morning, euro then retreated sharply to 1.4104 in NY morning on active cross selling of euro vs yen and gbp. However, the pair rebounded strongly to 1.4294 on the rally of eur/chf and the U.S. stock markets. Despite euro's retreat to 1.4182, renewed buying lifted the pair to 1.4249 in NY afternoon.

    The DJI rallied 423.37 points or 3.95% to 11143.31 whilst the FTSE 100, CAC 40, and DAX indices surged by 3.11%, 2.89%, and 3.28% respectively.

    Versus the Japanese yen, dollar rose to 77.22 in Asian morning but cross buying of yen and the decline in Asian stocks sent price lower to 76.31. Although the pair spiked above 77.00 level to 77.30 in European morning, usd/jpy dropped immediately back to 76.44 as traders said they had not seen any yen-selling intervention from Japanese authorities. Later, the greenback edged higher to 76.94 after the release of U.S. jobless claims (395K, less than forecast of 400K and the previous figure of 402K) in NY morning before stabilising.

    The British pound extended its erratic fall from Monday's 1.6510 high to 1.6111 in Australia. However, sterling staged a strong rebound to 1.6208 in tandem with the single currency in European morning. Later, Despite cable's retreat to 1.6118, renewed buying lifted the pair to 1.6340 ahead of NY closing.

    Data to be released on Friday include:

    Japan capacity utilisation, industrial production, EU industrial production, U.S. retail sales, U. Michigan survey, business inventories.

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    Market Review - 13/08/2011 00:32 GMT

    Euro rises on renewed risk appetite due to U.S. retail sales data

    The single currency strengthened Friday as better-than-expected U.S. retail data brought back investor's risk appetite but price retreated after the release of a dismal U.S. consumer sentiment report. Euro and sterling were supported by rebound in U.S. and European stock markets.

    The single currency ratcheted lower in Asia on broad-based selling of euro and tanked briefly to a low of 1.4150 due to renewed weakness in European stocks in early European morning before staging a rally to 1.4292 in NY morning on active cross buying of eur/chf (up from 1.0688 to 1.1092) and better-than-expected U.S. retail sales data. Euro later retreated to 1.4210 in part due to very weak U.S. consumer sentiment data before stabilising.

    U.S. retail sales M/M July and retail sales excluding auto M/M came out at 0.5% and 0.5% vs forecasts of 0.5% and 0.2% respectively. The University of Michigan consumer sentiment survey was far weaker-than-expected at 54.9 vs forecast of 63.0, its lowest level since 1980.

    The single currency was supported by the sharp rise in U.S. and European stock markets. The FTSE 100, CAC40, and DAX gained 3.04%, 4.02%, and 3.45%, respectively. The DJI closed up 1.13% or 125.71 points at 11269.02.

    Versus the Japanese yen, the greenback extended Thursday's rise to its intra-day high of 77.01 in Asian morning. However, dollar then ratcheted lower to 76.52 on dollar's broad-based weakness in NY morning but the pair rebounded to 76.90 on short-covering together with better-than-expected U.S. retail sales data in NY afternoon before retreating again.

    The British pound edged lower in tandem with euro in Asia and then fell briefly to an intra-day low of 1.6168. However, sterling rebounded strongly to 1.6313 in NY morning as equity markets made large gains before trading sideways.

    Data to be released next week include:

    U.K. rightmove hse prices, Japan Q2 GDP, annualised Q2 GDP, GDP deflator Q2, Swiss PPI, U.S. empire state manufacturing, Net LT TIC, NAHB housing mkt index on Monday;

    Australia RBA minutes, Germany GDP, U.K. CPI, RPI, EU GDP, trade balance, U.S. building permits, housing starts, export price index, import price index, capacity utilisation, industrial production on Tuesday;

    New Zealand PPI input, PPI output, EU current account, U.K. MPC vote, ILO unemployment,avg. earnings, EU HICP final, U.S. PPI, PPI core on Wednesday;

    Japan tankan manufacturing, trade balance, export Y/Y, import Y/Y, U.K. retail sales, U.S. CPI, CPI core, real earnings, jobless claims, existing home sales, leading indicators, Philadelphia Fed survey, Canada leading indicators, wholesale sales on Thursday;

    Germany PPI, U.K. PSNCR, PS net borrowing, Canada CPI, CPI core on Friday.

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    Market Review - 15/08/2011 22:00 GMT

    Euro rallies on risk appetites and dollar's broad-based weakness


    The single currency rallied to a three-week high against the greenback Monday on risk appetite and dollar's broad-based weakness as investors hoped that a meeting on Tuesday between French President Nicolas Sarkozy and German Chancellor Angela Merkel may result in further action to contain the region’s debt crisis.

    The single currency ratcheted higher from 1.4261 to 1.4329 in European morning before retreating to 1.4264. However, euro rallied sharply to 1.4476 in NY morning due to return of risk appetite together with dollar's broad-based weakness after release of weak U.S. data before stabilising. Active cross buying of euro vs yen and sterling also lifted the single currency as eur/jpy and eur/gbp rallied from 109.60 to 111.01 and from 0.8756 to 0.8829.

    The U.S. Empire state manufacturing index for August came in at -7.72 compared to a forecast of 0.80 and previous figure of -3.76. U.S. Net purchases of long-term securities fell to $3.7 billion in June from a revised $24.2 billion in May.

    Euro was also supported by the rally in U.S. equities as DJI surged by 1.90% or 213.88 points and closed the day at 11482.90.

    The single currency was also encouraged by the ECB's bond-buying last week as the ECB completed 22 billion euros of bond purchases under securities markets programme in week to Aug 12, which was the highest weekly settlement since it began buying EU government bonds from the market in May 2010.

    Versus the Japanese yen, the greenback briefly climbed above the 77.00 level to a high of 77.09 on active cross selling of yen. However, price retreated sharply to 76.80 in Asian morning before staging a recovery to 76.97. Dollar later fell in NY morning on weak U.S. manufacturing data and extended a intra-day decline to 76.60 after the release of U.S. net purchases of long-term securities before recovering to 76.88 in NY afternoon.

    The British pound traded sideways around 1.6280 in Asia and fell briefly to 1.6257 in European morning. However, cable rallied sharply to 1.6410 in tandem with euro in NY morning before trading sideways in NY afternoon.

    Data to be released on Tuesday include:
    Australia RBA meeting minutes, Germany GDP Q2, U.K. CPI, RPI, DCLG, EU GDP Q2, trade balance, U.S. building permits, housing starts, export price index, import price index, capacity utilisation, industrial production.

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    Market Review - 18/08/2011 22:32 GMT

    Dollar and yen rally broadly on debt crisis and global economic growth

    The single currency tanked on Thursday on renewed risk aversion as investors were worried about Europe's debt crisis could spread to the U.S. banking system. The much weaker-than-expected U.S. Philadelphia Fed business conditions index also fuelled concerns over the growth of global economy.

    Earlier in the day, the Wall Street Journal reported that U.S. Federal and state regulators, signalling their growing concern that Europe's debt crisis could spill into the U.S. banking system, were intensifying their scrutiny of the U.S. arms of Europe's biggest banks who do not have enough capital.

    The single currency penetrated Wednesday's NY low of 1.4422 at Asian open, price then weakened to 1.4381 staging a brief bounce to 1.4452 in European morning. However, euro plunged on renewed risk aversion due to selloff of European and US stock markets and extended its intra-day weakness to session low at 1.4271 on much weaker-than-expected U.S. Philadelphia Fed business conditions index (-30.7, forecast of 3.7) before recovering.

    The global stock markets took a big hit Thursday with DJI tumbling by 419.63 or -3.68% to 10990.58 whilst FTSE-100, CAC-40 and DAX indices closed down 4.49%, 5.48%, and 5.82% respectively.

    Versus the Japanese yen, the greenback continued to trade narrowly n the pair rose to an intra-day high at 76.71 in Asian morning before ratcheting lower to 76.46 in NY morning after the release of the weak U.S. Philadelphia Fed survey before stabilising.

    Although the British pound traded sideways in Asia and then climbed to an intra-day high of 1.6555 in European morning, sterling tumbled in tandem with euro to 1.6421 in NY morning as the disapointing U.S. Philadelphia Fed data was released, increasing investors' fears of a global slowdown in growth. However, price recovered to 1.6529 ahead of NY closing on short-covering.

    The commodity currencies tanked on Thursday due to risk aversion, aud/usd and nzd/usd tumbled from 1.0558 to 1.0352 and from 0.8378 to 0.8196 respectively. Usd/cad rallied from 0.9801 to 0.9939

    Spot gold rallied from $1784.80 per troy ounce and then climbed above $1813.70 to a fresh all-time high of $1828.50.

    On the data front, July U.S. existing home sales dropped by 3.5% to 4.67 million vs forecast of 4.9 million, down from 4.84 million sales in June. U.S. jobless claims were 408K vs consensus estimate of 400K, up from revised previous month figure of 399K.

    Data to be released on Friday include:

    Japan all industry index, Germany PPI, U.K PSNCR, PS net borrowing, Canada CPI, core CPI.

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    Market Review - 20/08/2011 03:25 GMT

    Yen surges to a fresh all-time high against dollar before recovering


    The Japanese yen briefly rallied to a new record high versus the dollar on Friday on comments from the Japanese Vice Finance Minister who said in an interview with the Wall Street Journal that the Bank of Japan does not plan to intervene often.

    Versus the Japanese yen, the greenback jumped to 77.00 in Asian morning on a commercial order before falling to 76.32 in European morning. Later, despite dollar's recovery to 76.64, the pair tanked below 76.25 to a fresh record low of 75.95 due to the comments from the Japanese Vice Finance Minister but the greenback swiftly recovered to 76.55.

    Takehiko Nakao, Japanese Vice Finance Minister, said 'we don't have plans to intervene often, intervention is not for use as a daily tool; we don't think recent yen moves really reflect economic fundamentals; there is no reason that the yen should be regarded as a flight-to-safety currency.'

    Despite euro's recovery to 1.4340 in Asian morning, the single currency fell below Thursday's low at 1.4271 to 1.4250 due to an early selloff in European stock markets. However, the pair rallied strongly on dollar's broad-based weakness together with strong cross buying of euro vs yen and sterling (eur/jpy and eur/gbp surged from 109.05 to 110.25 and from 0.8654 to 0.8747 respectively). The single currency eventually climbed to as high as 1.4453 in NY morning before retreating.

    Although the British pound also rebounded to 1.6525 in European morning, the pair retreated to an intra-day low at 1.6444 because of sharp fall in European equities. However, cable rallied strongly in tandem with euro to 1.6618 in NY morning on dollar's weakness but later pared almost all of its gain to 1.6456 ahead of NY closing due to active cross selling of sterling vs euro and yen.

    The DJI closed down by 172.93 points, or 1.57%, to 10817.65 whilst the FTSE-100, CAC-40, and DAX also fell 1.01%, 1.92%, and 2.19% respectively.


    Data to be released include next week:

    no data on Monday;

    Swiss trade balance, Germany manufacturing PMI, services PMI, EU manufacturing PMI, services PMI, consumer sentiment, Germany ZEW economic sentiment, ZEW current situation, U.K. CBI orders, Canada retail sales, U.S. new home sales on Tuesday;

    Germany IFO business climate, current assessment, EU industrial orders, U.S. durable goods, ex. transport, ex. defense, monthly home price on Wednesday;

    Germany consumer confidence, import price index, Swiss ZEW index, U.K. CBI distribution trade, U.S. jobless claims on Thursday;

    Japan national CPI, national core CPI, Tokyo CPI, U.K. Q2 GDP, Swiss KOF indicator, U.S. Q2 GDP, GDP deflator, PCE core, U. Michigan survey final on Friday.

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    Market Review - 22/08/2011 22:00 GMT

    Euro retreats on risk aversion


    The single currency pared its early gain Monday on risk aversion due to the retreat of U.S. equities. Investors are focusing on the August 26 conference in Jackson Hole by Federal Reserve Chairman Ben Bernanke who may indicate the Fed will increase monetary stimulus to boost the economy.

    Despite euro's brief rise to 1.4393 in Asia, the single currency edged lower to an intra-day low of 1.4347 before surging to 1.4434 on the rally in European equities together with cross buying of euro. However, the pair pared most of its gains and fell to 1.4366 in NY morning as U.S. stocks retreated together with cross selling of euro vs jpy and chf and then dropped further to 1.4356 ahead of NY closing

    DJI opened up by more than 1%, however, it pared its initial gain and closed the day at 10854.56, up by 37.00 points or 0.34%. FTSE-100, CAC-40 and DAX once rallied by more than 2% but they later retreated and eventually closed up by 1.08%, 1.14%, and down by 0.11% respectively.

    Versus the Japanese yen, the greenback rose to 76.87 in New Zealand following Sunday's comments by a senior Japanese government official, who said that there is no change in Japan's stance of taking decisive action in the currency market depending on market's developments. Despite dollar's retreat to 76.57 in Asian morning, the pair spiked to 77.21 on speculation of possible intervention from Bank of Japan but price came off quickly and then traded around 76.80 in European and NY sessions.

    Although the British pound traded sideways in Asia after last Friday's selloff from 3-month high of 1.6618 to 1.6456 and then rose to 1.6522 in NY morning, cable fell in tandem with euro to 1.6435 before recovering to 1.6489 in NY afternoon due to cross buying of gbp vs euro.

    Data to be released on Tuesday include:

    China HSBC flash manufacturing PMI, Japan Machine tools orders, Swiss Trade balance (chf), Germany Manufacturing PMI, Services PMI, ZEW Economic Sentiment, ZEW Current Situation, EU Manufacturing PMI, Services PMI, ZEW economic sentiment, Consumer Sentiment, U.K. BBA Mortgage Approvals, CBI Orders, Canada Retail sales, U.S. New home sales, Richmond Fed Manufacturing.

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