The pound climbed sharply against the dollar and the yen as an employment report with optimistic figures may have indicated that the worst of the recession is already behind, spurring demand for the British currency.
The pound, which lost significantly against the dollar and the yen last week, virtually pared its losses as an employment report in Britain brought optimism back among domestic investors. Today Intel Corp. forecast sales beyond analysts’ predictions, adding attractiveness for the pound sterling profile, which may proceed its rally if the current scenario remains unchanged.
GBP/USD traded at 1.6422 as of 20:16 GMT from an intraday price of 1.6275.
If you want to comment on the Great Britain pound’s recent action or have any questions regarding this currency, please, feel free to reply below.
The loonie posted the third day of advances against its U.S. counterpart as the crude oil, one of the main country’s exports, advanced today, boosting demand for the Canadian currency.
The Canadian dollar has been one of the best performing currencies this week, as stocks and commodities rebounded thanks to a renewed risk appetite among traders, favoring the high-yielding profile of the loonie. The greenback may continue to loose further versus its Canadian counterpart if the demand for commodities continues on the rise, increasing attractiveness for the commodity-linked Canadian currency.
USD/CAD fell to 1.1125 from a previous rate of 1.1365 in the intraday comparison.
If you want to comment on the Canadian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.
Obama Administration reportedly considering plans to make direct mortgage payments on behalf of some homeowners who are late on payments; also considering whether to allow delinquent borrowers to stay in their homes as renters - unconfirmed report. Plan would reportedly use rescue funds to subsidize the mortgage companies that participate in such a program. This is as speculated overnight, and will need to be confirmed to move past the rumor mill.
The Canadian Dollar was the big winner during yesterday’s session with USD/CAD selling off 2 big figures. There was no major Canadian news, but commodity prices maintained their support and US inflation indicators were ahead of expectations although still in a deflationary state as compared to last year, when the highs were seen on commodity prices (Oil = $145+.) On the retracement below from the March highs @ ~1.30 to the June lows (1.0785) we see the pair really starting breaking down around the 4-100 hr moving average and then again through the 1.1450 - 1.1410 area where some support was noted. The pair continued lower and broke the 4-200 hr mavg and found some support @ the 23.6% level of the aforementioned move. Although the signs are now negative for the pair, a slight correction to perhaps the last region where the pair broke down could be in order.
The USD/CAD is currently testing session lows, hitting 1.1351. The next level of support below this is near the 1.1250 level. On the top side, the 100MA comes in at 1.1404 (blue) and 200MA at 1.1452 (green)
The EUR/USD is currently testing the lower trendline of the current consolidation. A low was made for the session at 1.3912. A clear break below this level could send the pair to test near term support at the 1.3832 level. Longer term support comes in at the 38.2% Fibo level at 1.3619. The pair has been moving progressively lower since the 9th of July and has been in a tightening formation for the past few days.
ECB’s Mersch on the EU current state of affairs. Market rates remain low by international standards, states the effect of further cuts from low levels would be questionable. Low rates have their own internal drawbacks. Rates near 0% begin to distort money markets. Pace of global slump is now slowing. Savings rates in the US and China continue to pose threats to global economy. All recapitialization efforts by banks have yet to be exhausted
The EUR/USD has been in a tightening pattern since July 9th. The activity is defined by trendlines above and below with the price movements narrowing. Both 100MA (blue 1.3951) and 200MA (green 1.3961) are within 10 pips of each other. Typically when this type of pattern emerges, a currency pair will have a strong movement in one direction or another. The market will need some piece of economic news to trigger the movement. For now, this is a pair that should be monitored closely as it develops into a trading opportunity in the next 24 hours.
President Obama speaking today- Sees unemployment figures to continue to tick higher in coming months. Not immediately clear how fast jobs can be restored. Reminder: In the past week administration acknowledged that it saw unemployment rising to 10% or higher
JULY IBD/TIPP ECONOMIC OPTIMISM SURVEY out at 46.3 vs 49 expected.
No revision to June
MAY US BUSINESS INVENTORIES are down -1.0% vs an expectation of -0.8%
The prior month of April was revised from -1.1% to -1.3%
The UK’s Business Secretary Mandelson speaking today. Declines in economy are coming to an end; expecting pressure on spending from 2011. Continue to see recovery as fragile. The severity of the economy is not yet behind the UK
The New Zealand dollar posted its first climb in a week after a central bank statement which affirmed that the Southern nation will recover from the global slump at a faster pace than its main trading partners boosted attractiveness for the kiwi.
After Reserve Bank of New Zealand Governor Alan Bollard declarations today that the New Zealand economy will climb faster than its trading partners, the national currency reached a one-week high and posted the sharpest rally since a U.S. employment report two weeks ago brought pessimism back to equities and currency markets. The renewed confidence in the kiwi and New Zealand’s economy helped speculations that the interest rates in the country will be increased during the next 12 months, since domestic evidences already indicate that New Zealand is rebounding from the worst recession in 30 years. In the neighboring Australia, the national currency also climbed as a report showed business sentiment turned positive for the previous month, adding attractiveness for assets in the region.
Analysts are confident but at the same time cautious regarding the New Zealand dollar outlook, they affirm that even if domestically the nation is providing evidences for optimism and confidence, it is hard to determine what direction markets will take before the U.S. reporting season.
NZD/JPY climbed to 58.97 as of 11:59 GMT from a previous rate of 57.37. NZD/USD traded at 0.6334 from 0.6217.
If you want to comment on the New Zealand dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.
The USD/CAD has been testing lows today near the 1.1430 level. The pair failed to break above the 1.1720 level on July 8th 2009, and has been trending lower since that time. If the pair continues its movement lower, a test of the 38.2% level at 1.1365 may take place. Below this 1.1254 and 1.1143 are possible levels of support.
On the 4 hour chart we can see the pair between the goalposts with 100 MA at 1.1563, and the 200 MA at 1.1341. The 38.2% Fibonacci level comes in just above the 200MA at 1.1365.
At 8:30am US retail sales and PPI data was released adding some strength to the US dollar. This may add support to the 1.1427 level. If the pair bounces off of this level, we can look for the 100MA (blue) at 1.1479 and the 200MA (green) at 1.1495 to act as near term resistance.
CANADA MAY NEW MOTOR VEHICLE SALES M/M released as expected at 1.0% vs 0.0 in APRIL
- No Revisions to April.
JUNE ADVANCE RETAIL SALES released at 0.6% vs 0.4% Expected. Excluding AUTOS at 0.3% vs 0.5% expected.
JUNE PRODUCER PRICE INDEX M/M released at 1.8% vs 0.9% Expected
JUNE PPI EX FOOD & ENERGY M/M releases at 0.5% vs 0.1% Expected.
PPI Year over year at -4.6% vs -5.2% expected
PPI Ex Food & Energy Year over year at 3.3% vs 2.9% expected
The USD lost ground overnight as worldwide equity markets rose on speculation that this morning’s earning from Goldman Sachs will be positive. This may suggest to the marketplace that the worst of the global financial crisis may be behind us.
Crude oil rose to over $61/ bar, and Gold bounced up to the $924/oz range.
The jump in commodity prices helped the raw material producers post gains.
US Futures are also pointing to a higher opening this morning.
Oil:$61.23 Gold:$924.40
Today’s Data:
PPI: exp:.9% prior: .2%
Retail sales: exp:.4% prior: .5%
Bus Inv: exp; -1.0% prior: -1.1%
We have a number of US and Canadian Releases due out at 8:30am. This should hopefully give the markets some direction which lasts more than a day in one direction. There will also be US releases at 10am.
USD Retail Sales m/m expected to fall slightly to 0.4% from 0.5% last month.
USD PPI Producer Price Index m/m expected to rise 0.9% up from 0.2% last month.
CAD New Motor Vehicle Sales m/m expected gain of 1.0% over last months even 0.0%
The yen, which rallied for almost two weeks versus the pound and the euro, entered the second day of declines against the Eurozone currency, as speculations today led investors to purchase high-yielding assets in equities markets.
The Japanese currency declined versus all 16 major traded currencies as optimism returned to global financial markets on speculations that the Goldman Sachs Group Inc. will reporter bigger earnings today, and New Zealand’s Reserve Bank Governor Alan Bollard stated today that signs of a global economic recovery emerged, bringing confidence back to investors to purchase high-yielding assets in equities markets, damping demand for the safer attractiveness of the yen. Adding to the daily positive news favoring emerging markets and high-yield, a report in Australia showed that business sentiment was rather positive, providing support for the Aussie to climb against the Japanese currency.
Today, the earnings report to be published from Goldman Sachs will be a determinant factor for risk appetite during this week, according to Analysts. This week, provided that risk appetite returns among traders, may experience a significant fall for the Japanese currency, who rallied nonstop for almost two weeks on growing concerns that the global slump will be longer than expected.
GBP/JPY traded at 152.00 as of 11:04 GMT from a previous rate of 147.65. EUR/JPY also climbed from 128.22 to 130.21.
If you want to comment on the Japanese yen’s recent action or have any questions regarding this currency, please, feel free to reply below.
German Zew Economic Survey came in at 39.5, weaker than the 47.8 expected.
Euro-zone Zew Economic Survey came in at 39.5, weaker than the 44.5 expected.
Both numbers do not bode well for the Euro as it is trading off about 20 pips at 1.3973 vs Usd and 130.17 vs Jpy.
ZEW economists went on to say risks for the future remain centered on household and business lending levels
Stabilization of ZEW index confirms view that economy to shrink by 6% in current year which is what German governmnet expects.
Time frame: 30 min.
Indicators: MACD (12, 26, 9), Parabolic SAR default settings (0.02, 0.2)
Entry rules: When Parabolic SAR gives buy signal and MACD lines crossed upwards – buy.
When Parabolic SAR gives sell signal and MACD lines crossed downwards – sell.
Exit rules: exit at the next MACD lines crossover or if the market starts trading sideways for some time.
DCLG HPI y/y came in at -12.5%, slightly stronger than the -12.6% expected and -13.0% prior reading.
After a slew of UK data and comments from BoE’s Posen Gbp/Usd has traded in a range of 1.6270-1.6320 and now gravitating back to pre-data level of 1.6292.
BoE’s Posen states the inflation target did not pose a stability problem; UK policy action is broadly correct, inflation undershoot is a concern. The response of fiscal policy should be activism to try and stimulate the economy. He goes on to say that UK actions are ahead of EU and US actions. The effects of quantitative easing is unpredictable, was the right policy.
UK CPI y/y came in at 1.8% inline with estimates; CPI m/m came in at 0.3% inline with estimates
CPI falls below the BoE’s 2% target for the first time since September 2007
RPI m/m came in at 0.3% inline with estimates; y/y -1.6% also inline with estimates.
Sterling has made 3 attempts in last 8 hours to break the 1.6300 barrier. Earlier in the session there were rumors of selling out of Russia at that level. As trendline below indicates it still looks like a point of resistance for the pair. A break of this level could give Gbp/Usd the impetus for a further upward push.
Last week’s Yen bid looked like a straight risk averse play with investment capital coming home (Japan) from Europe and the US. However, the rapid appreciation of the Yen is reminiscent of what had occurred last fall when the world economies looked to be on the brink of collapse. Having lived through what seems like the worst and with some positive indicators finding their way through the economic releases, the latest Yen move could be more exaggerated than the last, based on global expectations for recovery. Looking at the EUR/JPY pair, the best currency pair indicating risk and equity appetite, we see the pair pulling itself up off last week’s lows as it keeps retesting support levels after each appreciation. The short-term perspective below could provide some short-term levels as the market deliberates its next move halfway through the summer months.
The week began in Asia with Sterling trading weaker across the board as McDonald’s Corp announced it’s relocating its European headquarters from London to Geneva, taking advantage of preferential intellectual property laws. In addition, the UKFI (UK Financial Investments Ltd.), which was set-up the manage the UK’s government stake in RBS and Lloyd’s commented that exiting the bank stakes could take several years, coupled with further write-downs from Lloyd’s (13 Billion Pounds) pushed the Sterling down almost 2 big figures against the USD. However the dust has settled and Cable has been fighting back all day. On the hourly chart below we see the pair has broken the 200hr moving average and is approaching trendline resistance and the 38.2% retracement. We will watch these levels to provide resistance, with a break leading to the 50% level in the short-term.
The Russian ruble completed a week of consecutive losses versus the euro and the dollar, as speculations in Russia indicate that the recession will be depper than previously announced.
Several reasons brought the Russian currency down since last week, which lost against the euro and the greenback for seven days in a row after oil prices went down, the national budget deficit widened and the interest rates in Russia suffered the fourth cut in less than 6 months. Economists stress in the fact that a weakening demand for oil and growing concerns regarding the global recession are weighing on the ruble, that may extend its losses as long as this negative scenario prevail.
USD/RUB traded at 32.76 as of 23:33 GMT rising from a previous rate of 32.67.
If you want to comment on the Russian Ruble’s recent action or have any questions regarding this currency, please, feel free to reply below.
The Mexican currency, highly dependent on its main trading partner, the United States, posted a sixth day of losses against the greenback on concerns that the economy in the region will not rebound as soon as forecasts predicted.
The peso reached the lowest levels in two months against the dollar as the U.S. economy has been showing signs of further economic problems, and an expected rebound in the Latin American nations economy will take longer than previously forecast. Mexico entered its first recession since 2001, as the economic conditions of its main trading partner, the United States, damped demand for Mexican exports, affecting negatively the country’s economy and currency.
USD/MXN traded at 13.7100 as of 23:19 GMT from a previous rate of 13.6815.
If you want to comment on the Mexican peso’s recent action or have any questions regarding this currency, please, feel free to reply below.
The New Zealand dollar is heading to the lowest rate in eight weeks against the yen and losing against the greenback, as global risk aversion is damping demand for the kiwi’s high-yield profile.
The New Zealand dollar started another week with a negative performance as pessimism is still spreading in equities markets locally and world wide, damping demand for the kiwi, which often experiences falls as risk aversion grows among traders. A report in New Zealand added for the pessimism towards the kiwi, as farmers confidence fell for the third time since November, since dairy prices are constantly slumping in the country, slashing profits in the agriculture sector. The Australian dollar followed its regional counterpart and also declined substantially, being the worst performer against the greenback, on speculations that U.S. corporate profits will fall, adding to the growing attractiveness of safer positions with the U.S. dollar and the yen.
The economic situation in New Zealand, as in its neighbor Australia does not offer attractiveness enough for traders to purchase kiwi priced assets, as risk aversion is driving them away to other overseas options. Even if the economic contraction in the region is far less considerable as it is in other continents, the volatility of the New Zealand dollar is being an option for traders to profit, currently selling it to purchase yen priced assets.
NZD/JPY declined to 57.43 as of 11:51 GMT from an opening price of 57.98. NZD/USD followed, from 0.6277 to 0.6222.
The British pound started this week losing against currencies like the euro and the dollar as speculations that British banks may announce further losses rose, suggesting that the worst moments of the recession are still to come.
The Sunday Times, one of the most prestigious U.K. newspapers affirmed yesterday that Lloyds Banking Group Plc, one of the giants of the British financial sector, would be in a difficult situation and that it may post further losses, reflecting this Monday on British stocks and the national currency, which is being traded at the lowest level in two months against the euro. Concerns regarding a longer than expected crisis in the U.K. made the FTSE 350 Banks Index to drop 1.5 percent, as U.K. Gilts rose, attracting British investors to the safety of fixed income earnings.
The banking sector in the U.K. has not been posting any alarming news for the past weeks, but this Sunday Times article rose risk aversion among traders that are already concerned with the international economic scenario. The pound may post further declines against the euro, if risk appetite, which was supporting the British currency, fail to reappear. Currencies like the yen and the greenback still have a bullish perspective versus the pound, as the growing risk aversion attracts traders to safer assets.
EUR/GBP traded at 0.8686 as of 10:36 GMT rising from an opening price of 0.8599. GBP/USD fell to 1.6044 from 1.6195.
If you want to comment on the Great Britain pound’s recent action or have any questions regarding this currency, please, feel free to reply below.
