Daily Currency Analysis
Posted 11-10-2009 at 03:48 PM by TraderPlanet.com
EUR/USD
There was no G20 dollar support at the weekend meetings with a notable concentration by government officials on providing further support for the global economy. These comments maintained expectations that US interest rates would remain at very low levels to help foster a recovery. ECB President Trichet also stated that currency levels had not been a subject for discussion at the BIS meetings, further dampening expectations of any dollar support.
There were comments from the IMF that the dollar was still over-valued on a medium-term view, although it did add that it was now close to a fair value. The comments triggered renewed dollar selling in Asian trading on Monday and the US currency remained on the defensive throughout the day.
The Euro-zone data was stronger than expected with a further recovery in the Sentix business confidence index to -7 from -12.6 the previous month and this was the strongest figure since 2007. In addition, there was a further increase in German industrial production for September which helped underpin the Euro.
As risk appetite improved, the Euro challenged levels above 1.50, although the US currency was able to resist further losses during the New York session which suggests that the Euro may find it difficult to secure further gains.
Comments from Fed officials will continue to be watched closely in the near term, although the dollar will need robust comments to make any significant headway.
Source: VantagePoint Intermarket Analysis Software
Yen
There was renewed interest in commodity currencies during Asian trading on Monday and this tended to weaken the yen slightly on a renewed flow of funds into high-yield currencies.
Trade tensions between China and the US will be watched closely and any increase in stresses would provide some degree of yen support. The dollar was close to the 90 level on Monday with significant yen losses on the crosses. The record US Treasury bond auctions could trigger additional yen volatility during the forthcoming week.
The yen was unable to make further significant ground during Monday as firm global stock markets curbed any defensive demand for the currency.
Sterling
Sterling pushed higher in Asian trading on Monday s the US currency came under wider selling pressure.
The UK currency found additional support in early Europe with a three-month peak near 1.6850. The move to a hostile GBP9.8bn approach for UK company Cadburys by Kraft foods increased speculation over substantial takeover-related capital inflows and Sterling also pushed to an 8-week high near 0.89 against the Euro.
There was some retreat later in the session, although losses were again curbed by improving risk appetite. There has been a notable decline in short speculative Sterling positions and this will reduce the scope for a further covering of positions which will also tend to slow any further Sterling gains.
There will be further uncertainty ahead of the Bank of England quarterly inflation report on Wednesday, especially as this report has triggered a very high degree of volatility over the past few releases.
Swiss franc
The dollar was subjected to renewed selling pressure on Monday and traded very close to 2009 lows with a trough near the 1.0050 level. The Euro was able to make some slight headway against the franc, but movement was limited.
Markets will inevitably focus on the parity level in the near term which will increase the threat of further selling pressure on the franc, although markets will also be very wary of central bank action to curb franc gains.
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Source: VantagePoint Intermarket Analysis Software
Australian dollar
Firm housing data helped underpin the Australian currency in local trading on Monday and there was renewed interest in commodities which pushed the Australian dollar higher with a high above 0.92 as the US currency remained under important pressure.
Overall confidence in the Australian dollar will also remain robust in the short term and there will be further strong interest in the currency on any significant retreats. As equity markets rallied, the Australian dollar challenged highs near 0.93 and was very close to the 2009 peak seen during October.
There was no G20 dollar support at the weekend meetings with a notable concentration by government officials on providing further support for the global economy. These comments maintained expectations that US interest rates would remain at very low levels to help foster a recovery. ECB President Trichet also stated that currency levels had not been a subject for discussion at the BIS meetings, further dampening expectations of any dollar support.
There were comments from the IMF that the dollar was still over-valued on a medium-term view, although it did add that it was now close to a fair value. The comments triggered renewed dollar selling in Asian trading on Monday and the US currency remained on the defensive throughout the day.
The Euro-zone data was stronger than expected with a further recovery in the Sentix business confidence index to -7 from -12.6 the previous month and this was the strongest figure since 2007. In addition, there was a further increase in German industrial production for September which helped underpin the Euro.
As risk appetite improved, the Euro challenged levels above 1.50, although the US currency was able to resist further losses during the New York session which suggests that the Euro may find it difficult to secure further gains.
Comments from Fed officials will continue to be watched closely in the near term, although the dollar will need robust comments to make any significant headway.
Source: VantagePoint Intermarket Analysis Software
Yen
There was renewed interest in commodity currencies during Asian trading on Monday and this tended to weaken the yen slightly on a renewed flow of funds into high-yield currencies.
Trade tensions between China and the US will be watched closely and any increase in stresses would provide some degree of yen support. The dollar was close to the 90 level on Monday with significant yen losses on the crosses. The record US Treasury bond auctions could trigger additional yen volatility during the forthcoming week.
The yen was unable to make further significant ground during Monday as firm global stock markets curbed any defensive demand for the currency.
Sterling
Sterling pushed higher in Asian trading on Monday s the US currency came under wider selling pressure.
The UK currency found additional support in early Europe with a three-month peak near 1.6850. The move to a hostile GBP9.8bn approach for UK company Cadburys by Kraft foods increased speculation over substantial takeover-related capital inflows and Sterling also pushed to an 8-week high near 0.89 against the Euro.
There was some retreat later in the session, although losses were again curbed by improving risk appetite. There has been a notable decline in short speculative Sterling positions and this will reduce the scope for a further covering of positions which will also tend to slow any further Sterling gains.
There will be further uncertainty ahead of the Bank of England quarterly inflation report on Wednesday, especially as this report has triggered a very high degree of volatility over the past few releases.
Swiss franc
The dollar was subjected to renewed selling pressure on Monday and traded very close to 2009 lows with a trough near the 1.0050 level. The Euro was able to make some slight headway against the franc, but movement was limited.
Markets will inevitably focus on the parity level in the near term which will increase the threat of further selling pressure on the franc, although markets will also be very wary of central bank action to curb franc gains.
j
Source: VantagePoint Intermarket Analysis Software
Australian dollar
Firm housing data helped underpin the Australian currency in local trading on Monday and there was renewed interest in commodities which pushed the Australian dollar higher with a high above 0.92 as the US currency remained under important pressure.
Overall confidence in the Australian dollar will also remain robust in the short term and there will be further strong interest in the currency on any significant retreats. As equity markets rallied, the Australian dollar challenged highs near 0.93 and was very close to the 2009 peak seen during October.
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