Forex trading updates

Weekly Trading Update - 21-25 September 2009

2009-10-02T04:36:00.001-07:00

Well this week could have been a spectacular one but it was sadly a case of missed opportunities. I've been talking about the GBP/USD entering a new downward trend for a few weeks now but when it did finally break downwards this week, it left me behind. I was waiting for a slight pull-back yesterday morning after the initial breakout so I could get a good entry point, but sadly there wasn't one. It was a similar story on the EUR/GBP and GBP/JPY pairs as well, so in the end I only ended up trading two positions.

The first trade was on the EUR/USD pair early Tuesday morning. The daily Supertrend was green, ie bullish, so I was still looking for long positions on the 4 hour chart, and I went long after an upwards EMA crossover at 1.4710. I then closed half the position for 50 points and let the other half run, moving my stop loss to break-even. Sadly my target price of 1.4850 didn't quite get triggered, and worse still the price then fell back to take me out at break-even.

(There was another upwards EMA crossover on this pair but I didn't trade this one as I thought the upward trend was starting to run out of momentum).

The second trade was slightly more profitable. It was on the USD/JPY later that day. I went short after a downwards EMA crossover at 91.41 and then closed half the position for 40 points and the second half of the position for a further 40 points at 90.61.

So it was still a profitable week but as I say it could have been a hugely profitable week if I could have got a few good entry points on some of the big movers.

Forex: Dollar back down Fri, Sep 25 2009

2009-10-02T04:35:00.000-07:00

Consumer Confidence was revisited to the upside, reaching 73.5 for September, while New Home Sales come out 429K at from 433K previous month, also under expectations. Rising 0.7%, less than expected, U.S. stocks spike to the downside, and quickly reverse, still with no strong definitions.

Greenback tuned to the downside against major rivals, with GBP/USD back to the 1.6000 level, and EUR/USD approaching to key 1.4700 zone. USD/JPY fell back close to 90.00, and majors are attempting to regain the bullish strength against U.S. currency.

U.S. Forex Market Commentary Thu, Sep 24 2009

2009-10-02T04:33:00.000-07:00

EURO

The euro weakened vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4625 level and was capped around the $1.4800 figure. The Federal Reserve, European Central Bank, Bank of England, Bank of Japan, and Swiss National Bank today announced they will extend their liquidity-providing facilities and operations through January 2010. The common currency was partially dragged lower by comments from Bank of England Governor King who said the weaker sterling has been “helpful” in reducing economic and financial imbalances. News that BoE would meet with London-based economists on Tuesday to discuss economic policies. Data released in the eurozone today saw the French number of unemployed rise 0.7% m/m to 2.553 million. Also, the German Ifo business confidence index rose to 91.3 in September from 90.5 in August, the sixth consecutive improvement but below expectations. The German economy, however, could suffer from political uncertainty, difficult credit conditions, and a weakening labour market. The ECB’s September monthly bulletin reported the EMU-16 economy is stabilizing. ECB member Quaden reported the worst of the financial crisis is over but said business may not return to normal. In U.S. news, data released in the U.S. today saw August existing home sales off 2.7% to an annualized 5.10 million rate. Weekly initial jobless claims fell to 530,000 from a revised 551,000 while continuing claims fell to 6.138 million from a revised 6.261 million. Euro bids are cited around the US$ 1.3900 figure.

JPY / CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥90.35 level and was supported around the ¥91.60 level. Bank of Japan announced it will extend liquidity provision measures through January 2010 to cushion money markets in concert with other central banks. Yen borrowing costs declined to a three-year low with three-month Libor at 0.34750, the lowest level since June 2006. Similarly, U.S. dollar three-month Libor printed at a record low of 0.28500. U.S. dollar rates have been below Japanese dollar rates since 24 August and that has resulted in the U.S. dollar being used as a carry trade funding currency. Data released in Japanese overnight saw the July all industry activity index climb +0.5% with industrial production up 2.1% m/m and the tertiary index up +0.6% m/m. Additionally, the August trade surplus came in stronger-than-expected at ¥187.5 billion. The Nikkei 225 stock index gained 1.67% to close at ¥10,544.22. U.S. dollar offers are cited around the ¥94.75 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥133.35 level and was capped around the ¥134.65 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥146.30 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥88.15 level. In Chinese news, the U.S. dollar lost ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8218 in the over-the-counter market, down from CNY 6.8256. People’s Bank of China Deputy Governor Hu yesterday reported G20 nations should consider establishing an international wealth fund to invest a portion of members’ current account surpluses. There is continued speculation among dealers that Chinese monetary authorities may allow the yuan to appreciate further vis-à-vis the U.S. dollar.

September 24, 2009 Free Forex Trading Video - How To Get Rich Slowly

2009-10-02T04:28:00.000-07:00

Many people enter the world of forex trading with the aim of making as much money as possible. However the assumption that most people make is that they need to be trading lots of positions in order to generate these big profits.

This is not necessarily the case though because it can be just as profitable (and it most cases a lot more profitable) to trade the longer term charts. I myself use the daily charts to determine the overall trend and the 4 hour charts for my entry and exit points.

However as Adam Hewison points out in his latest trading video, you can generate some serious profits by lengthening the time frame even further and trading the monthly price charts.

For example in this video you will learn how you could have successfully generated a clear profit of 6383 pips over the years just by trading the monthly chart of the EUR/USD pair. Plus because of the fact that currencies often trend for very long periods, you should see similar results when trading the other currency pairs as well.

USD Crumbles ahead of FOMC Wed, Sep 23 2009

2009-09-22T22:47:00.000-07:00

USD Crumbles ahead of FOMC

U.S. Dollar Trading (USD) started to fall in Asia and the move accelerated in Europe as the market through caution to the wind and sold the dollar aggressively. New Year Highs were seen on the EURO, CHF and NZD against the Dollar. Traders were caught a little off guard as many thought the trading would be contained ahead of the FOMC announcement. Crude Oil was down $1.84 closing at $91.55. In US Stocks, DJIA +51 points closing at 9829, S&P +7 points closing at 1071 and NASDAQ +8 points closing at 2146. Looking ahead, FOMC Announcement widely expected to remain at 0.25% but attention will be given to the Statement and any talk of exit strategies.

The Euro (EUR) rallied from the start of Asia to test 1.4800 in Europe before consolidating gains around the figure. Key resistance is seen at 1.4850-70 and then onto the Key Psychological Level of 1.5000. EUR/GBP fell from fresh year highs above .9080 on a sell recommendation from a prime US investment bank. Overall the EUR/USD traded with a low of 1.4683 and a high of 1.4843 before closing at 1.4790. Looking ahead, EU September PMI Manufacturing forecast at 49.7 vs. 48.2 previously. Also released, PMI services forecast at 50.5 vs. 49.9.

The Japanese Yen (JPY) gained with broad USD weakness although fresh strength in US stocks helped most the crosses remain in familiar territory. USD/JPY found support at the 91 figure with the outlook remaining very cloudy as last weeks rejection of the 90 level being countered by yesterday's sharp reversal lower from the 92.50 level. Overall the USDJPY traded with a low of 90.49 and a high of 92.04 before closing the day around 91.05 in the New York session. Looking ahead, Bank holiday on Wednesday.

The Sterling (GBP) was one of the strongest currencies yesterday as crosses gave some reprieve along with a strong rally in GBP/USD up to the 1.6400 figure in late US trade. Helping lift the struggling pound was the sharp pull back in EUR/GBP and strong rally in Oil. Overall the GBP/USD traded with a low of 1.6217 and a high of 1.6406 before closing the day at 1.6360 in the New York session. Looking ahead, MPC minutes released from the meeting earlier this month.

The Australian Dollar (AUD) broke to fresh year highs in late US trade as Gold and Oil surged and risk appetite remain very elevated. USD weakness and NZD strength are helping underpin. AUD/NZD is under pressure though with the key 1.2000 level under threat. Overall the AUD/USD traded with a low of 0.8642 and a high of 0.8789 before closing the US session at 0.8750.

Gold (XAU) gained over $15 an ounce as Gold buyers flooded back into the market after the $1000 test on Monday failed. Overall trading with a low of USD$1004 and high of USD$1019 before ending the New York session at USD$1014 an ounce.

TECHNICAL COMMENTARY

Chart

Euro – 1.4810

Initial support at 1.4611 (Sept 21 low) followed by 1.4516 (Sept 14 low). Initial resistance is now located at 1.4866 (Sept 22 08 high) followed by 1.4908 (Aug 22 2008 high)

Yen – 90.75

Initial support is located at 90.13 (Sept 16 low) followed by 90.00 (Sept 16 low). Initial resistance is now at 92.53 (Sept 21 high) followed by 93.3 (Sept 7 high).

Pound – 1.6380

Initial support at 1.6135 (Sept 21 low) followed by 1.6114 (Sept 1 low). Initial resistance is now at 1.6568 (Sept 17 high) followed by 1.6742 (Sept 11 high).

Australian Dollar – 0.8770

Initial support at 0.8591 (Sept 21 low) followed by the 0.8529 (Sept 8 low). Initial resistance is now at 0.8875 (Sept 17 high) followed by 0.8814 (Aug 22 ' 08 high).

Gold – 1017

Initial support at 995 (Sept 21 low) followed by 982 (Sept 3 low). Initial resistance is now at 1024 (Sept 17 high) followed by 1032 (Mar 18 2008 high).

U.S. Forex Market Commentary Tue, Sep 22 2009

2009-09-22T22:45:00.000-07:00

EURO

The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4820 level and was supported around the $1.4670 level. Demand for risk grew today and the greenback was a casualty of the revival in risk appetite. Some traders got short U.S. dollars ahead of the Federal Open Market Committee’s interest rate decision tomorrow and Group of Twenty meeting later in the week in Pittsburgh. Speculation that the FOMC may decide to pare back or not renew some of its asset purchase programs contributed to a weaker greenback. A decision by the Fed to accelerate the end of its quantitative easing programs further could have a rough impact on the Treasury and mortgage-backed securities markets. On the other hand, an indication that the Fed plans to extend its emergency funding programs could have a negative impact on the U.S. dollar. U.S. economic data have been stronger recently and this probably works against the Fed extending some programs. Data released in the U.S. today saw September Richmond Fed manufacturing index remain steady at +14, unchanged from August’s +14 level. Also, the July housing price index was up 0.3% m/m and off 4.2% y/y. U.S. Treasuries appreciated after the sale of a record US$ 43 billion in two-year notes. In eurozone news, European Central Bank member Weber talked about exchange rates today, indicating they are “not out of line with stronger data coming from the eurozone compared to some other regions.” ECB member Sramko reported “There are still question marks over euro-zone growth despite upward revisions,” adding the ECB is “ready to take necessary steps” if economic growth stumbles after governments’ stimuli are phased out. This week’s G20 meeting could be a watershed event for the U.S. dollar. There have been strong international calls to replace the U.S. dollar as the main international reserve currency. Some announcements are expected on attempts to limit bankers’ pay. Euro bids are cited around the US$ 1.3900 figure.

JPY/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥90.95 level and was capped around the ¥92.10 level. Liquidity remained reduced during Australasian dealing on account of the ongoing Japanese market holiday. Asian Development Bank lifted its growth forecast for some developing Asian countries today and this added to risk appetite among traders. The yen continues to enjoy a positive interest rate differential over the U.S. dollar with the latter now acting as a funding currency given its record low levels. Three-month US$ Libor was fixed today at 0.28563 with three-month yen Libor fixed at 0.34875. Bank of Japan Governor Yamaguchi last week reported that maintaining emergency credit programs for “a long time…may hurt an autonomous recovery of market functions and invite the distortion of the allocation of resources.” He added, however, that a “positive mechanism has started to take hold in the Japanese economy.” The central bank voted to keep monetary policy unchanged last week and upgraded its assessment of the economy. New finance minister Fujii last week verbally intervened saying exchange rates “should be determined by the state of a nation’s economy.” His comments suggest the new Democratic Party of Japan government may not be inclined to sell the yen through actual intervention. The Nikkei 225 stock index on Friday lost 0.70% to close at ¥10,370.54. U.S. dollar offers are cited around the ¥94.75 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥134.55 level and was capped around the ¥135.30 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥149.40 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥88.80 level. In Chinese news, the U.S. dollar lost ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8190 in the over-the-counter market, down from CNY 6.8299. People’s Bank of China Deputy Governor Hu reported G20 nations should consider establishing an international wealth fund to invest a portion of members’ current account surpluses. There is continued speculation among dealers that Chinese monetary authorities may allow the yuan to appreciate further vis-à-vis the U.S. dollar.

U.S. Forex Market Commentary Mon, Sep 21 2009

2009-09-22T22:44:00.001-07:00

EURO

The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4610 level and was capped around the $1.4710 level. Traders will focus on some key events this week. First, the Federal Open Market Committee convenes tomorrow and Wednesday and is not expected to change interest rates at this time. Instead, Fed-watchers are interested to see if the FOMC provides any guidance as to when it may terminate some of its emergency funding programs with a particular emphasis on its programs to support the mortgage-backed securities market. The Fed is expected to provide at least some guidance about the exit strategy associated with its liquidity provision programs. The Fed is likely to acknowledge the recent improvement in U.S. economic data. It will also be interesting to see if the Fed acknowledges the recent weakness in the U.S. dollar. Second, all eyes will be on Pittsburgh where Group of Twenty officials are convening this week. Global policymakers are said to be promoting ideas for a consolidated regulatory framework in many jurisdictions including the U.S. and the eurozone. The further regulation of capital markets including the imposition of limits on the salaries of employees at financial institutions will be closely watched. Likewise, it will be interesting to see if G20 officials acknowledge the U.S. dollar’s recent weakness. Data released in the U.S. today saw August leading indicators climb 0.6%, below expectations and below the revised July print of +0.9%. Nonetheless, today’s print represented the fifth consecutive monthly improvement. Tomorrow’s U.S. data include the September Richmond Fed manufacturing index and July house prices. In other U.S. news, the Fed rejected the U.S. Treasury’s request to review its structure and governance. In eurozone news, European Central Bank policymaker Mersch reported “A low interest rate policy over a long period remains a very big danger for the banking system. This situation can’t be kept up for too long and as soon as the economy has started to recover well we will take the necessary measures to bring back a normalized rate structure. Mersch also said the economic crisis “is not over yet” and said there’s “still a whole row of risks” to banks and economies. ECB President Trichet urged G20 governments and central banks to coordinate their policies further. Euro bids are cited around the US$ 1.3900 figure.

JPY / CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥92.50 level and was supported around the ¥91.30 level. Liquidity was reduced on account of a Japanese market holiday that will keep liquidity reduced through Thursday. The yen continues to enjoy a positive interest rate differential over the U.S. dollar with the latter now acting as a funding currency given its record low levels. Three-month US$ Libor was fixed today at 0.28938 with three-month yen Libor fixed at 0.34875. Bank of Japan Governor Yamaguchi last week reported that maintaining emergency credit programs for “a long time…may hurt an autonomous recovery of market functions and invite the distortion of the allocation of resources.” He added, however, that a “positive mechanism has started to take hold in the Japanese economy.” The central bank voted to keep monetary policy unchanged last week and upgraded its assessment of the economy. New finance minister Fujii last week verbally intervened saying exchange rates “should be determined by the state of a nation’s economy.” His comments suggest the new Democratic Party of Japan government may not be inclined to sell the yen through actual intervention. The Nikkei 225 stock index on Friday lost 0.70% to close at ¥10,370.54. U.S. dollar offers are cited around the ¥94.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥135.50 level and was supported around the ¥134.15 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥149.60 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥89.25 level. In Chinese news, the U.S. dollar gained ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8299 in the over-the-counter market, up from CNY 6.8291. China may purchase some of the 403.3 metric tons of gold being offered for sale by the International Monetary Fund to diversify its reserves. People’s Bank of China reported it will adjust monetary policy at an “appropriate time.” There is speculation among dealers that Chinese monetary authorities may allow the yuan to appreciate further vis-à-vis the U.S. dollar.

STERLING

The British pound fell vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6130 level and was capped around the $1.6265 level. Sterling remains under pressure on ongoing speculation that Lloyds Bank is facing liquidity pressures. Additionally, a Bank of England report noted concerns over U.K. debt issuance are increasing and this is also pressuring sterling. Data released in the U.K. overnight saw the September Rightmove house price index climb 0.6% m/m and decline 1.5% y/y. Minutes from the September BoE Monetary Policy Committee meeting are expected on Wednesday. Sterling faces downside risks if there was talk among policymakers that U.K. rates may need to remain lower for longer than expected. Cable bids are cited around the US$ 1.6030 level. The euro extended recent gains vis-à-vis the British pound as the single currency tested offers around the £0.9075 level and was supported around the £0.9040 level.

U.S. Forex Market Commentary Mon, Sep 21 2009

2009-09-22T22:44:00.000-07:00

Last week’s currency trading review

2009-09-22T22:38:00.002-07:00

The Dollar was broadly weak against nearly all currencies for a second week as Gold consolidated gains above $1000 and the Euro and Aussie hit fresh year highs. US stocks markets traded at year highs above 9800 on the Dow Jones. Helping risk sentiment was the large jump in August Retail Sales up 2.7% vs. 2.0% forecast. The Euro traded at 2009 highs of 1.4768 but finished well off these levels on Profit taking into the weekend. EUR/GBP buying help support as the cross broke above the key 0.9000 level. German ZEW forecast at 59.9 came in at 57.7 in September weaker than forecast but still higher than 56.1 previously. The EUR/USD gained 0.93% closing at 1.4707, after opening the week at 1.4570.

The Japanese Yen found strength in comments from the new Finance Minister Fujii stating he was not keen on government intervention in the FX markets and that a strong Yen was not necessarily bad for the Japanese economy. The BOJ met and discussed rates, keeping them at 0.1% but upgrading their economic view. The USD/JPY closed higher +0.93% at 91.35 after opening the week at 90.70. The GBP was pummeled lower by comments from BoE Governor King about lowering the interest paid on Bank reserves. Crosses all broke key levels with GBP/JPY under 150 and GBP/AUD under 1.9000. GBP/USD fell -2.40% closing at 1.6267 after opening at 1.6658. The AUD continued higher with gold sitting above $1000 and risk appetite remaining elevated. 0.8800 proved too much for the pair and it fell back to 0.8700 supports but is remaining well supported on both Interest Rate and Commodity outlooks. The AUD/USD closed up 0.47% at 0.8673 after opening at 0.8632.

The forex trading week preview

In the States; On Monday, August Leading Indicators forecast at 0.6% vs. 0.85 previously. On Tuesday, July House Price Index forecast at 0.5% vs. 0.5% previously. On Wednesday, FOMC Rate Decision forecast unchanged at 0.25% vs. 0.25%. On Thursday, Weekly Jobless 546k vs. 545k previously. On Friday, August Durable Goods forecast at 0.1% vs. 5.1% previously. Also released, UoM Consumer Confidence forecast unrevised at 70.2. The G20 meet on Thursday and Friday, releasing the Communique on Friday Afternoon. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Wednesday, September PMI Manufacturing forecast at 49.8 vs. 48.2 previously. PMI Services is forecast at 50.4 vs. 49.9 previously. On Thursday, German IFO forecast at 92.0 vs. 90.5 previously. On Friday, EU Money Supply forecast at 2.7% vs. 3.0% previously. In the UK; On Wednesday, MPC meeting minutes from this month. On Thursday, MPC Member and BOE chief Economist Dale speaks. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; Light data week with BOJ meeting minutes released on Friday from last weeks meeting. In Australia; On Wednesday we have NZD GDP forecast at -0.2% vs. -1.0% previously. On Thursday, RBA Financial Stability Review released. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY
Currency Sup 2 Sup 1 Spot Res 1 Res 2
EUR/USD 1.4467 1.4516 1.471 1.4768 1.4866
USD/JPY 89.71 90 91.5 91.64 92.6
GBP/USD 1.6114 1.6237 1.625 1.6568 1.6742
AUD/USD 0.8529 0.8625 0.8675 0.8814 0.8943
XAU/USD 982 992 1004 1032 1050

* Euro – 1.4710

Initial support at 1.4516 (Sept 14 low) followed by 1.4467 (Sept 9 low). Initial resistance is now located at 1.4768 (Sept 17 high) followed by 1.4866 (Sept 22 2008 high)

* Yen – 91.50

Initial support is located at 90.00 (Big Figure) followed by 89.71 (February 11 low). Initial resistance is now at 91.64 (Sept 15 high) followed by 92.60 (Sept 9 high).

* Pound – 1.6250

Initial support at 1.6237 (Sept 3 low) followed by 1.6114 (Sept 1 low). Initial resistance is now at 1.6742 (Sept 11 high) followed by 1.6831 (Aug 7 high).

* Australian Dollar – 0.8675

Initial support at 0.8529 (Sept 8 low) followed by the 0.8383 (61.8% retrace 0..9850-0.6009). Initial resistance is now at 0.8813 (Aug 22 2008 high) followed by 0.8943 (76.4% retrace 0.9850-0.6009).

* Gold – 1004

Initial support at 992 (Sept 15 low) followed by 982 (Sept 3 low). Initial resistance is now at 1032 (Mar 17' 2008 high) followed by 1050 (Psychological Figure).

U.S. Forex Market Commentary Sun, Sep 20 2009

2009-09-22T22:31:00.000-07:00

EURO

The euro ceded some gains vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4645 level and was capped around the $1.4745 level. The common currency failed to establish another multi-month high again today for the first time since 4 September. The greenback moved higher at the expense of European currencies on speculation that U.K. banking giant Lloyds lacks capital. Three-month U.S. dollar interbank lending rates fell to a record low of 0.289% today meaning Libor is now lower than the yen’s and Swiss franc’s Libor rates, rendering the U.S. dollar a funding currency for carry trades. Federal Reserve Chairman Bernanke’s renomination was made official today by the Obama administration. The Fed is currently devising plans to limit bank employees’ pay in an attempt to discourage excessive risk-taking. Data to be released in the U.S. next week include August leading indicators, the September Richmond Fed manufacturing index, and July house prices. In eurozone news, the EMU-16 July current account moved into surplus at €6.6 billion for the for the first time since February 2008, up from June’s revised deficit of €4.3 billion. Also, German producer price inflation rose 0.5% m/m and fell 6.9% y/y with the ex-energy component up 0.3% m/m and off 3.4% y/y. Euro bids are cited around the US$ 1.3900 figure.

JPY / CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥91.55 level and was supported around the ¥90.90 level. Bank of Japan Governor Yamaguchi reported that maintaining emergency credit programs for “a long time…may hurt an autonomous recovery of market functions and invite the distortion of the allocation of resources.” He added, however, that a “positive mechanism has started to take hold in the Japanese economy.” The central bank voted to keep monetary policy unchanged last night and upgraded its assessment of the economy. New finance minister Fujii verbally intervened saying exchange rates “should be determined by the state of a nation’s economy.” His comments suggest the new Democratic Party of Japan government may not be inclined to sell the yen through actual intervention. In contrast, former finance minister Yosano said his government had “unshakable” support for the U.S.’s strong dollar policy. The Japanese government has not officially intervened in the markets since March 2004. As expected, Bank of Japan yesterday upgraded its assessment of the Japanese economy and noted the economy is “showing signs of recovery.” The Nikkei 225 stock index lost 0.70% to close at ¥10,370.54. U.S. dollar offers are cited around the ¥94.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥134.45 level and was supported around the ¥133.70 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥148.25 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥88.80 level. In Chinese news, the U.S. dollar gained ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8291 in the over-the-counter market, up from CNY 6.8200. This week’s U.S. TICS investment flows data revealed China was a net buyer of U.S. government assets last month. People’s Bank of China reported it has kept the yuan stable vis-à-vis the U.S. dollar to promote regional stability. PBoC also reported “the Australian dollar is a shadow currency of the yuan.”

STERLING

The British pound fell sharply vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6230 level and was capped around the $1.6455 level. Concerns that U.K. banking giant Lloyds may be experiencing a liquidity shortfall weighed heavily on sterling. Bank of England Monetary Policy Committee member Miles was quoted as saying “We may get a couple of quarters pretty soon of very small increases in GDP. If you take that technical definition, we might be out of the recession in six or nine months.” BoE also reported U.K. lenders are not seeing any significant increase in demand for new business loans. Data released in the U.K. today saw CML August average gross mortgage lending off 13% at £12.6 billion. Prime Minister Brown today called for the immediate establishment of crisis management groups to manage troubles at multinational banks. Group of Twenty officials convene in Pittsburgh next week. Other data released in the U.K. today saw the M4 money supply increase 0.1% m/m and 12.6% y/y while August public sector net borrowing improved to £16.1 billion from £8 billion in July. Cable bids are cited around the US$ 1.6030 level. The euro extended recent gains vis-à-vis the British pound as the single currency tested offers around the £0.9055 level and was supported around the £0.8955 level.

Forex: USD/CHF ends week below 1.0300 for the first time in 14 months Fri, Sep 18 2009, 23:08 GMT

2009-09-18T20:07:00.001-07:00

The Swiss Franc ended slightly down on Friday against the Dollar but with strong gains for the week. USD/CHF tested 1.0275 during the American session but failed to break below. For the first time in five days the pair did not reach fresh lows for the year. In the last two weeks Greenback has fallen more than 300 pips. On the upside, USD/CHF has a resistance zone at 1.0320 and above at 1.0365. On the other side, below multi-month lows support lies at 1.0220.

Franc is also stronger against the Yen and Cable. GBP/CHF plunged form 1.6950 to 1.6715, posting a fresh 4-month low. The pair has fallen in the last five day accumulating a decrease of more than 550 pips. To the Yen, the Swiss rebounded in a daily uptrend line and rose for four consecutive day ending with a weekly gain of 150 pips. CHF/JPY is consolidating above 88.00.

Markets ends week at 2009 highs; Dollar holds near multi-month low Fri, Sep 18 2009, 21:48 GMT

2009-09-18T20:06:00.001-07:00

FXstreet.com (Córdoba) – Markets in the U.S. ended Friday with moderate gains. The Dow Jones Industrial Average rose 0.35% on Friday and more than 2% form last week. Main stocks indexes also finished close to the highest level since October of 2008.

The Dollar finished slightly up on the last day of the week. During the American session moved sideways across the board. Cable was the worst among currencies, falling to a 2-week low against the Dollar and to a 4-month low to the Franc and the Euro.

Greenback failed to hold below 1.4700 and lost previous gains to the Euro. The pair ended down for the day but during the week gain more than 100 pips, accumulating an increase of 400 pips for the current month.

USD/JPY moved sideways during the American session between 91.00 and 91.50. Greenback failed to break above 91.60 and remains near multi-month lows. The Euro rose only a few pips against the Yen on Friday. EUR/JPY rose everyday of the week rising from 131.00 to 134.80.

Forex: USD/JPY rises above 91.30 Fri, Sep 18 2009, 20:40 GMT

2009-09-18T20:04:00.000-07:00

The Dollar remained steady against the Yen during the American session. USD/JPY is moving inside a range between 91.60 and 91.00 since yesterday. The fracture of this lateral channel could give some acceleration toward the direction of the break. On the downside the next support lies at 90.50 and below at 90.10. On the upside resistance is located at 91.80 and above at 92.00. Despite being near multi-month low, Greenback, in a weekly basis, is gaining after five consecutive weeks with losses.

Forex: Cable falls to 1.6230 against the Dollar Fri, Sep 18 2009, 20:28 GMT

2009-09-18T20:01:00.000-07:00

FXstreet.com (Córdoba) – Cable weakness across the board remains intact. GBP/USD fell to 1.6230 posting a fresh intra-day low. During the American session the pair plunged more than 100 pips. At 1.6320 Cable has a key support, in case the pair falls below Greenback could gain momentum. The next support lies at 1.6200. Cable is heading toward a weekly loss of more than 400 pips and has fallen in the last four days.

Forex: EUR/USD moves sideways, holds above 1.4700 Fri, Sep 18 2009, 18:30 GMT

2009-09-18T20:00:00.000-07:00

FXstreet.com (Córdoba) – The Euro is back above 1.4700, recovering after falling to 1.4680. In the last hours EUR/USD moved sideways in a range with support at 1.4710 and resistance at 1.4735. Greenback failed to hold gains and weakened. Despite recent rise in the pair, for the day is still down, 0.20% below today’s opening price. It is the first day in almost two week that the Euro does not reach fresh multi-month highs.

The ecPulse.com analysis team comments: “ After sinking to the lowest level since September, 2008 the dollar rebounded today after investor’s concerns of economical outlook shifted their attention to low yielding assets rather than holding higher yielding assets, even as improvement was seen in the Manufacturing, Housing and services sector.”

Forex: EUR/USD: Euro dips below 1.4700 as U.S. markets dip Fri, Sep 18 2009, 14:32 GMT

2009-09-18T19:59:00.001-07:00

The Euro has weakened somewhat on early U.S session, as U.S. stocks approach negative levels, and the pair has breached 1.4700 level to hit 1.4680.

Initial support, below 1.4700, remains at 1.4640 (Sept 16 low) and below here, 1.4625. and 1.4560 (Sept 3 low). On the upside, resistance levels, above 1.4700, lie at 1.4770 /Sept 17 high) and above here, 1.4800 and 1.4825 (Sept 23'08 high).

On the downside, Mohammed Isah, technical analyst at FXTechstrategy, warns about corrective pullbacks to 1.4634: "Corrective pullbacks could be shaping up. Its daily studies which are deeply overbought add to this view and if that plays out, declines could be seen towards the 1.4634 level, its Sept 11’09 high at first with a break and hold below there creating scope for further declines towards the 1.4446 level, its Aug 09 high."

India Forex Reserves Increase 9/18/2009

2009-09-18T19:55:00.000-07:00

Friday, the Reserve Bank of India said in a report that the total foreign exchange reserves stood at US$ 280.978 billion as on September 11, larger than the US$ 277.65 billion recorded as on September 4.

At the same time, the foreign currency assets increased to US$ 264.56 billion from US$ 261.66 billion last week. The gold reserves remained unchanged at US$ 9.828 billion.

Meanwhile, nation's reserve position with the International Monitory Fund amounted to US$ 1.37 billion, larger than the US$ 1.35 billion last week.

U.S. Forex Market Commentary Thu, Sep 17 2009,

2009-09-18T19:54:00.000-07:00

STERLING

The euro extended recent gains vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4765 level and was supported around the $1.4685 level. Data released in the U.S. today saw August housing starts improve to 598,000 from a revised July print of 589,000 while August building permits improved to 579,000 from a revised July print of 564,000. Also, weekly initial jobless claims fell to +545,000 from a revised +557,000 while continue jobless claims were higher than expected at 6.230 million. Moreover, the September Philadelphia Fed survey printed at 14.1, an improvement from the August reading of 4.2. All eyes will be on next week’s Group of Twenty meeting in Pittsburgh to see if policymakers make any progress on some countries’ initiative to replace the U.S. dollar as the main international reserve currency. In eurozone news, German finance minister Steinbrueck warned against “too much euphoria” with regard to economic expectations. Steinbrueck also said there are no current initiatives to withdraw fiscal stimuli. On a pessimistic note, he added “We have no credit crunch in Germany on a macroeconomic level, but on a microeconomic level we have it, and it could intensify.” Concerning the Merkel government’s plan to cut taxes after the 27 September general election, he noted those plans are “unreal.” Data released in the eurozone today saw July construction output fall 2% m/m and 10.8% y/y. Also, the EMU-16 July trade surplus improved to €6.8 billion. Euro bids are cited around the US$ 1.3900 figure.

JPY / CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥91.60 level and was supported around the ¥90.50 level. As expected, Bank of Japan upgraded its assessment of the Japanese economy and noted the economy is “showing signs of recovery.” The central bank kept the unsecured overnight call rate unchanged at 0.1% and maintained their emergency lending programs for financial institutions and companies. The “showing signs of recovery statement” represented an upgrade from last month’s “stopped worsening” statement. BoJ Governor Shirakawa reported that while fiscal stimulus measures have been helpful, policymakers “are not confident about the strength of private final demand after those effects fade.” Shirakawa also noted BoJ officials are monitoring the yen’s recent appreciation. Similarly, BoJ Deputy Governor Yamaguchi noted “High downside risks to the economy are continuing, reflecting such things as the international finance and economic situation, and medium- to long-term growth expectations of companies.” Data released in Japan today saw the July tertiary index improve while the Ministry of Finance’s large company business sentiment survey revealed Japanese manufacturers turned optimistic about the economy for the first time in nearly two years. Yesterday, incoming finance minister Fujii talked about recent movements in exchange rates, reporting they “are not fluctuating rapidly now.” There is definitely less concern in the market now over actual intervention than there was when the Liberal Democratic Party was in charge. Fujii also said it is important to respect the central bank’s independence and said the central bank should not finance spending. The Nikkei 225 stock index climbed 1.08% to close at ¥10,443.80. U.S. dollar offers are cited around the ¥94.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥134.75 level and was supported around the ¥133.40 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥149.55 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥88.75 level. In Chinese news, the U.S. dollar gained ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8200 in the over-the-counter market, up from CNY 6.8187. Yesterday’s U.S. TICS investment flows data revealed China was a net buyer of U.S. government assets last month.

U.S. Forex Market Commentary Wed, Sep 16 2009

2009-09-18T19:53:00.000-07:00

STERLING

The euro extended recent gains vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4730 level and was supported around the $1.4645 level. Federal Reserve Chairman Bernanke yesterday reported the U.S. recession “appears to be over” and this gave a bid to some global asset markets. Many data were released in the U.S. today. First, the August consumer price index was up 0.4% m/m, exceeding expectations and stronger than the previous 0.0% reading, while the ex-food and energy component was up 0.1%, matching July’s print and expectations. August CPI was off 1.5% y/y, up from the prior reading of -2.1% y/y, and the core ex-food and energy rate came at +1.4%, down from the prior reading of +1.5%. Other data released today saw the Q2 current account balance print at –US$ 98.8 billion, an improvement from the previous reading of –US$ 101.5 billion but worse than expectations. Moreover, July total net TIC flows printed at –US$ 97.5 billion, down from the revised –US$ 56.8 billion June total. Net long-term TIC flows were also lower at US$ 15.3 billion, down from a revised US$ 90.2 billion in June. Data revealed that both China and Japan continue to be net purchasers of U.S. assets while Russia appears to be selling U.S. assets. Both China and Russia have been vocal proponents of replacing the U.S. dollar as the main international reserve currency. Other data released today saw August capacity utilization improve to 69.6% with industrial production falling to +0.8% from a revised +1.0%, still above expectations. Finally, the September NAHB housing market index matched expectations with a reading of +19, up from +18 in August. The U.S. Treasury reported it will reduce some borrowing on behalf of the Federal Reserve to keep government debt under a legal limit. In other Fed news, the Fed has tightened its review of commercial real estate. Bernanke is expected to testify before Congress about regulatory change on 1 October. The Federal Open Market Committee’s interest rate decision is expected next Wednesday. In eurozone news, the German retail sector reported it believes most of the worst of the recession is still ahead of us. Data released in the eurozone today saw EMU-16 August consumer price inflation off 0.2% y/y, unrevised from the provisional estimate, and was up 0.3% m/m. Euro bids are cited around the US$ 1.3900 figure.

JPY / CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥90.15 level and was capped around the ¥91.35 level. Incoming finance minister Fujii talked about recent movements in exchange rates, reporting they “are not fluctuating rapidly now.” There is definitely less concern in the market now over actual intervention than there was when the Liberal Democratic Party was in charge. Fujii also said it is important to respect the central bank’s independence and said the central bank should not finance spending. Most traders believe BoJ will not change interest rates when its policy decision is announced overnight. There is a possibility the central bank could make an announcement about the renewal or non-renewal of some emergency programs that are currently expected to expire by year’s end. The yen has recently benefited from its positive interest rate differential over the U.S. dollar and from the repatriation of overseas yen proceeds ahead of the fiscal half-year end at the end of the month. The new head of the banking and postal service ministry said he will seek to assist small companies get through the credit crunch by extending their loan payments for three years. Today’s U.S. TICS flows data revealed Japan was a net buyer of U.S. Treasuries last month. The Nikkei 225 stock index climbed 0.52% to close at ¥10,270.62. U.S. dollar offers are cited around the ¥94.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥133.85 level and was supported around the ¥132.45 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥148.60 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥87.15 level. In Chinese news, the U.S. dollar lost ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8187 in the over-the-counter market, down from CNY 6.8225. Today’s U.S. TICS investment flows data revealed China was a net buyer of U.S. government assets last month.

U.S. Forex Market Commentary Tue, Sep 15 2009

2009-09-18T19:52:00.001-07:00

EURO

The euro extended recent gains vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4685 level and was supported around the $1.4560 level. The common currency established another intraday high dating to 18 December 2008 as traders assumed more risk in their portfolio and chased higher-yielding currencies. Data released in the U.S. today saw the August headline producer price index climb 1.7% m/m and off -4.3% y/y, up from the July reading of -0.9% m/m and -6.8%, respectively. The core ex-food and energy component was up 0.2% m/m and 2.3% y/y, up from the prior reading of -0.1% and down from the prior reading of 2.6%, respectively. These data suggest some pricing power may be returning to the wholesale market in the U.S. and could presage a small amount of inflation. Federal Reserve policymakers would likely approve of higher inflation because inflation is now seen as being under target. Other data released in the U.S. today saw August advance retail sales up a stronger-than-expected 2.7%, a steep increase from the revised July print of -0.2%, while the ex-autos component also reversed course and was up 1.1%. Additionally, the September Empire State manufacturing index improved to 18.88 from the prior reading of 12.08 while July business inventories were off 1.0%. The positive tenor to U.S. economic data continues and while it has resulted in a bid in many asset markets, the Federal Reserve is likely to keep interest rates unchanged for quite some time. On the policy front, Group of 20 policymakers will convene in Pittsburgh in a couple of weeks next week and are likely to press for higher capital requirements at many “systemically-important banks.” In eurozone news, the German ZEW economic expectations index rose to 57.7 in September from 56.1 in August, defying expectations for a stronger print. Also, EMU-16 labour costs were up 4.0% y/y in Q2, an acceleration from +3.6% in Q1. Euro bids are cited around the US$ 1.3900 figure.

JPY / CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥91.65 level and was supported around the ¥90.80 level. Bank of Japan’s Policy Board is expected to keep its overnight call rate target unchanged this week and keep its emergency lending programs intact. BoJ’s quarterly tankan survey will be released on 1 October and could provide the central bank with some near-term direction on monetary policy. Deflation remains a sizable threat in the Japanese economy with consumer prices having fallen 2.2% in July. Finance minister Yosano verbally intervened against the yen’s recent appreciation, noting “sudden currency moves are unwelcome.” Data released in Japan overnight saw August final machine tool orders off 71.5% y/y. There is some speculation in the Japanese media that Bank of Japan will adopt a “more positive assessment” of the Japanese economy this week but it is not known if the assessment will be an upgrade. The Nikkei 225 stock index climbed 0.15% to close at ¥10,217.62. U.S. dollar offers are cited around the ¥94.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥133.70 level and was supported around the ¥132.75 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥149.45 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥88.15 level. In Chinese news, the U.S. dollar gained ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8225 in the over-the-counter market, up from CNY 6.8224. The Obama administration yesterday announced tariffs on Chinese tires and other goods while China announced it is launching an anti-dumping investigation into U.S. chicken and auto products. Most economists do not believe a trade war will ensue.

STERLING

The British pound weakened vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6400 figure and was capped around the $1.6655 level. Sterling came off after it was reported U.K. annual consumer price inflation remained below the central bank’s 2.0% target for a third consecutive month in August, up 1.6% y/y. This was below July’s print of 1.8% and represented the weakest result since January 2005. Sterling was also weaker after Bank of England Governor King reported reducing the interest it pays on deposits could be a “useful supplement” to current monetary policy. Prime Minister Brown reported the government will reduce fiscal spending to rein in the fiscal deficit. Other data saw the July DCLG house price index off 8.3%. The opposition U.K. Conservative party reported it would seek a loose monetary policy from the BoE if it wins the general election. Cable bids are cited around the US$ 1.6330 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the £0.8895 level and was supported around the £0.8770 level.

U.S. Forex Market Commentary Mon, Sep 14 2009

2009-09-18T19:46:00.001-07:00

EURO

The euro extended recent gains vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4650 level and was supported around the $1.4515 level. The common currency reached its highest level since 18 December 2008 as negative sentiment continued to surround the U.S. dollar. Data released in the eurozone today saw EMU-16 employment decline 702,000 in the second quarter, up from -1.2 million in the first quarter. Other data released today saw EMU-16 July industrial production decline 0.3% m/m and 15.9% y/y. Many economists believe the Federal Reserve will raise interest rates before the European Central Bank. Interest rate futures are currently indicating the ECB will hike rates later and more slowly than the Fed. Euribor interest rate futures are signaling the ECB will raise rates in Q4 2010 from their current 1.0% level. In contrast, fed funds futures are predicting a 60% chance the Fed will lift interest rates to 0.25% no later than Q2 2010. Most economists continue to predict the U.S. unemployment rate will top out north of 10% and that jobs may slowly be created next year. The U.S. dollar has become a carry trade vehicle as borrowing costs are at record lows and the current interest rate structure is favouring higher-yielding currencies including the euro, Australian dollar, and New Zealand dollar. The Obama administration is currently preparing a plan that would overhaul global financial institutions, an initiative the government will try to gain support for at the upcoming Group of Twenty summit in Pittsburgh. ECB Vice President Papademos reported he will remain at the ECB until the end of his term and ECB President Trichet said that if Lehman Brothers were rescued one year ago it would not have necessarily have prevented the financial crisis from worsening. ECB member Wellink said he expects the economic recovery to be “very slow.” The European Union today maintained its 2009 eurozone inflation forecast at 0.4% and now sees gross domestic product growth off 4% this year. In U.S. news, San Francisco Fed President Yellen reported the Fed should boost employment and curb disinflation. Yellen also warned a major decline in the U.S. dollar could precipitate inflation and said unemployment will likely “remain elevated” for a few years. Euro bids are cited around the US$ 1.3900 figure.

JPY / CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥91.15 level and was supported around the ¥90.20 level. Bank of Japan’s Policy Board convenes this week and is likely to keep interest rates unchanged. The central bank also likely will not decide at this meeting whether or not to let its liquidity support programs expire at the end of December. BoJ-watchers are curious to see if the central bank will mention the deflationary pressures that are evident in the economy. BoJ Governor Shirakawa will speak after the central bank’s decision is announced on Thursday and could reiterate that deflationary pressures are likely for some time. Data released in Japan today saw the July revised industrial production up 2.1% m/m, better than the preliminary +1.9% print. Ministry of finance official Tango reported the government is paying “close attention” to the yen but did not hint at actual intervention. Notably, Japan’s fiscal half year ends at the end of this month and some of the recent appreciation of the yen could represent companies repatriating their overseas assets. The Nikkei 225 stock index lost 2.32% to close at ¥10,202.06. U.S. dollar offers are cited around the ¥94.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥132.90 level and was supported around the ¥131.30 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥149.90 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥87.80 level. In Chinese news, the U.S. dollar gained ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8224 in the over-the-counter market, up from CNY 6.8220. The Obama administration announced tariffs on Chinese tires and other goods while China announced it is launching an anti-dumping investigation into U.S. chicken and auto products. Most economists do not believe a trade war will ensue.

U.S. Forex Market Commentary Mon, Sep 14 2009

2009-09-18T19:46:00.000-07:00

FOREX-Yen shines, strikes 7mth high on tarnished USD

2009-09-14T04:24:00.002-07:00

SYDNEY, Sept 14 - The yen was broadly higher on Monday, with talk of Japanese repatriation helping it strike a fresh 7-month high on a U.S. dollar which was undermined by falling U.S. Treasury yields.

Traders said the latest drop in Treasury yields had surprised many and forced Japanese investors in hybrid currency positions to sell dollars for yen.

With U.S. LIBOR rates LIBOR falling further below Japanese rates, the U.S. dollar was also fast becoming the preferred funding currency for carry trades.

Also weighing on the U.S. dollar was persistant talk of Asian central banks diversifying from U.S. dollars to other currencies and assets, including gold. Spot gold XAU= was holding above $1000 and ounce, lending some support to commodity currencies.

The U.S. dollar was weaker at 90.28 yen JPY=, having fallen to as low as 90.18 yen according to Reuters graphics. It was down from 90.64 yen late on Friday when it shed over 1 percent. Dealers say there are large option barriers at around 90 yen and gains could be capped around that level.

The 90 yen level is also considered to be psychologically important and a break below that level could pose a headache for Japanese authorities who have usually frowned upon a sharply higher currency in the past. [nSP189738]

The dollar got little support from improving U.S. consumer sentiment on Friday as prospects for a sustained global economic recovery and low U.S. borrowing rates continued to encourage investors to move out of the U.S. dollar into riskier assets and higher-yielding currencies.

"The U.S. dollar is fighting an uphill battle, while the yen is basking in the sun of renewed buying interest," said Matthew Strauss, senior currency strategist at RBC Capital.

"Important technical breaks, the dollar replacing the yen as a funding currency for buying riskier assets, debt concerns and questions about the dollar's reserve currency status are all weighing on it."

This month alone the U.S. dollar index or .DXY has lost 2.0 percent fall to its lowest in a year with greenback down against all the major currencies.

Trade tensions between the United States and China [ID:LD514738] added to the U.S. dollar's woes on worries China might retaliate by selling more of its U.S. dollar assets.

On Monday, the euro EUR= was firmer at $1.4591, having hit a 2009 high of $1.4634 on Friday. But the single currency ceded ground on the yen, trading at around 131.79 EURJPY=R, down from 132.17 yen late in New York on Friday.

FOREX-Yen shines, strikes 7mth high on tarnished USD

2009-09-14T04:24:00.001-07:00

U.S. Forex Market Commentary Sun, Sep 13 2009,

2009-09-14T04:22:00.000-07:00

The euro came off marginally vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4550 level and was capped around the $1.4635 level. Chicago Fed President Evans today said inflation is “under control,” in contrast to a recessionary period in the 1970s when inflation was rampant. Kansas City Fed President Hoenig reiterated the economy is ongoing while influential economist John Taylor warned the Fed may have to raise interest rates in early 2010. Taylor also warned the U.S. dollar will continue to depreciate if the U.S. does not improve its debt position. Data released in the U.S. today saw the August import price index climb 2.0% m/m and decline 15.0% y/y, an improvement from the revised July print of -19.2% y/y. Also, July wholesale inventories were off 1.4%, down from the revised June result of -2.1%, while the mid-September University of Michigan consumer sentiment indicator came in at 70.2, up from the prior reading of 65.7. In eurozone news, reportes that European Central Bank President Trichet is retiring were dismissed. ECB member Bini Smaghi said interest rates need to rise before inflation. Trichet reported the ECB needs to remain “alert” on price developments. ECB member Juncker noted the euro’s current level should not hurt the economy and said there are the “first signs of improvement” in the economy. ECB’s Paramo reiterated “all options” remain on the table for the ECB’s exit strategy. Central bankers continue to try and get eurozone commecial banks to lend more of the liquidity the central bank is plying into the system. Euro bids are cited around the US$ 1.3900 figure.

JPY / CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥90.20 level and was capped around the ¥91.80 level. The pair weakened to its lowest level since February as traders continued to react to the Democratic Party of Japan’s electoral victory and the yen’s positive interest rate differential over the U.S. dollar. Notably, U.S. dollar interbank borrowing costs are now cheaper than yen interbank borrowing costs and the U.S. dollar is now being used more than yen in short carry trades to finance positions in higher-yielding currencies. The Ministry of Finance confirmed the government will continue its aggressive buyback of Japanese government securities. Finance minister Yosano reported there is not a full-fledged economic recovery yet. Data released in Japan this week saw the August corporate goods price index unchanged m/m and off 8.5% y/y while July core machinery orders were off 9.3% m/m and 34.8% y/y. Also, Q2 GDP was up 0.6% q/q, lower than the expected gain of +0.9% q/q but still enough to suggest Japan’s economy is no longer in a technical recession. Despite this week’s data that evidenced positive economic growth, BoJ-watchers believe the central bank will not exit its monetary stimulus measures anytime soon. The Nikkei 225 stock index lost 0.66% to close at ¥10,444.33. U.S. dollar offers are cited around the ¥94.75 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥131.55 level and was capped around the ¥133.80 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥150.45 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥86.95 level. In Chinese news, the U.S. dollar lost ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8220 in the over-the-counter market, down from CNY 6.8234. People’s Bank of China adviser Fan Gang this week reported “macroeconomic policies must be preemptive. Some PBOC-watchers believe China is unlikely to lift interest rates or reserve requirements within the next six months. China’s commerce ministry today said now is the time for Chinese companies to invest overseas.