Dollar Stuck Near Multi-Month Lows Monday Morning:8/9/2010

(RTTNews) -  The dollar remained under pressure versus other major currencies Monday morning, as a dismal recent stretch has cost the greenback nearly all of its springtime gains against the euro and sterling.

Meanwhile, the dollar hangs on the precipice of falling to a fresh 1995 low against the yen.

Stock futures are pointing slightly higher on Wall Street this morning, following Friday's lackluster session.

Concerns about the US jobs market were validated last week with yet another troubling employment report from the Labor Department.

On Friday, government data showed a larger-than-expected drop in July payrolls.

Looking at today's currency charts, the dollar was on pause versus the euro, holding with a penny of Friday's 3-month low of 1.3333.

The dollar was stuck at 1.5950 versus the sterling, having come within a whisker of 1.6000 for the first time since February.

Against the yen, the buck steadied near Y85.50 after testing its 15-year low of 84.80 late last week.

The Federal Reserve will gather in Washington this week to announce the latest interest rate decision.

Policymakers are expected to keep rates near zero for "an extended period," and signal concerns about the pace of the economic recovery.

Outlook for Euro Improves But Still Remains Pessimistic:August 9th, 2010  

The euro endured hard times this year as the financial crisis in the European Union made us question the very existence of the currency. Therefore, the rally it showed this summer was rather unexpected. The experts expected the rally to end soon, perhaps even this month. Does the outlook changed? Not much, though it became somewhat more bullish.

The bears point out that the countries such as Greece, Spain and Portugal can drag the EU economy to the bottom, causing the European shared currency to collapse. The good example of such viewpoint is the words of editor of the Gartman Letter:

The euro has had a spectacular bounce. Were all of the problems that were attendant and discussed and so obvious in February, March and April of this year, have they been alleviated? Not even slightly. The major trend for the euro is still toward disintegration.

The bulls say that the European economy more stable than perceived. Jean-Claude Trichet, the President of the European Central Bank, tries very hard to support such point of view, stating that “the available data for the third quarter are better than expected” and ”the market is functioning a little bit better”. The growth of the services and manufacturing industries in Europe and the strong Germany’s economy can be considered evidences of the improving economic situation in the EU. The IMF is planning to provide the next part (€9 billion) of the promised €750 billion bailout as Greece is performing measures to reduce the budget according to the agreement.
Despite all the good signs, and even as the US is becoming next major reason for the concerns, the sentiment among the economists still remains pessimistic for the euro. The rally may end any time and the speculations persist about the possible parity with the US dollar or even the disintegration of the 16-nation currency. The forecast were revised upward but the euro still expected to decline versus the greenback to 1.22 by the end of this year.
If you want to comment on the euro’s recent action or have any questions regarding this currency, please, feel free to reply below.

NZ Dollar Drops as Central Bank:August 9th, 2010

The New Zealand dollar fell today after the report showed that the house prices increased with slower pace, causing the speculation that the central bank wouldn’t raise the interest rates next month. The house prices in New Zealand grew 4.1 percent in July from a year earlier, following the growth by 5.2 percent in the previous month. The Reserve Bank of New Zealand announced, after it raised the key rate to 3 percent last month, that the slower economic growth prompts to slow the pace of the rates’ increases.
NZD/USD dropped from 0.7336 to 0.7313 today as of 9:58 GMT.
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.

1 South Korean won = 0.000862 U.S. dollars:August 9th, 2010

The South Korean won extended its rally for yet another day as the anticipation that the central bank would raise the interest rates increased the appeal of the currency. The central bank increased the borrowing costs by the quarter percentage point on July 9 from the record low level of 2 percent. The forecasts promise the consumer prices in South Korea to rise by 2.8 percent in 2010, up from the previous estimates of 2.6 increase. The analysts say that the inflation pressure alone should push the won up even without the rates hike.
USD/KRW fell from 1,161.20 to 1,160.00 as of 9:18 GMT today.
If you want to comment on the South Korean won’s recent action or have any questions regarding this currency, please, feel free to reply below.

Australian Dollar Momentum and Sentiment Point to Gains:8/8/2010

 

The Australian Dollar finished the week near multi-month highs against its downtrodden US namesake, bolstered by similar strength in the S&P 500 and general financial market risk sentiment. Consistently strong Australian economic data served to bolster the currency further, and it seems that fundamental trends point to continued AUD gains. A comparatively empty economic calendar in the week ahead should theoretically mean slower currency price moves, but traders should watch out for any noteworthy surprises in upcoming Australian Employment Change results.

The Australian Dollar finds itself in a position of strength amidst solid fundamental trends and bullish sentiment amidst global financial markets. In fact, forex options markets’ three-month volatility expectations for the AUDUSD have fallen to their lowest levels since early May—at which point the AUDUSD traded near $0.9300. Given that the Australian Dollar boasts a fairly significant yield advantage versus the US Dollar and other counterparts, the promise of low currency volatility encourages speculators to buy the AUD on the assumption that interest rate payments will offset any potential currency depreciation. Of course financial markets are very fickle, and any significant deterioration in risk sentiment could easily shift expectations and force noteworthy AUDUSD pullbacks.

Barring a substantive shift in market sentiment, market dynamics favor further Aussie dollar strength. Traders should monitor any and all surprises in the upcoming Australian Employment Change report, but it may take a fairly large disappointment to truly derail economic outlook for the antipodean economy. It will otherwise be critical to watch the trajectory of the S&P 500 and similar asset classes. The index initially took a dive following relatively disappointing US employment data, but a quick recovery through later trade suggests that bulls have some fight left in them. Whether the index continues to press higher may be the most important factor in determining the direction of the highly risk-sensitive Australian Dollar.

Euro Rally at Risk Ahead of German GDP Data:8/8/2010

The Euro hit fresh multi-month highs against the US Dollar amidst generally positive economic developments out of the single currency bloc and fairly disappointing economic data out of the US economy. Traders sent the USD lower against every single G10 counterpart through Friday’s close, and momentum plainly favors further declines. Given comparatively strong fundamental developments out of the Euro Zone, it is relatively little surprise to see that the Euro was quite nearly the top-performer through Friday’s close. Yet the coming week of European economic data could very well set the tone for short to medium-term trading.

Markets anxiously await the results of several key Euro Zone economic data releases in the week ahead—most notably German and broader Euro Zone Gross Domestic Product growth figures for the second quarter. Bullish trends in business survey figures and other key data points lead economists to predict that Germany saw its strongest growth since Q1, 2008 in the second quarter. Such relatively lofty expectations leave ample room for disappointment, however, and it will be critical to see whether reality can match forecasts. Analysts likewise believe that Germany—Europe’s largest economy—will continue to drive broader Euro Zone growth. It suffices to say that any disappointments out of said release could have broader implications for general market sentiment for regional fundamentals.

Traders have recently seemed all-too-willing to punish the US Dollar for lackluster economic data as of late, and one has to wonder whether similar disappointments out of the Euro Zone would have the same effect on the Euro currency. Certainly the past two months of gains leaves short-term momentum plainly in favor of EURUSD gains. Yet the currency pair is approaching what may potentially prove a significant resistance mark at $1.3500—the 50% Fibonacci retracement of the December, 2009 – June 2010 decline and the pair’s 200-day Simple Moving Average. On the US Dollar side, the widely-followed Dollar Index is currently at risk of breaking below a long-standing trend channel and its own 200-day moving average.

The coming week may prove critical in determining broader EURUSD trends if we see a test of the key 1.3500 handle. Euro bulls may look to protect profits on a potential failure at said level—especially as oscillators have reached heavily overbought levels on daily charts. - DR

Gold’s Best Run in Nine Months...Conviction of $1,250:8/8/2010

Gold ended the week with another strong advance. Closing Friday well in positive territory, the precious metal in fact recorded its most consistent bull trend (eight consecutive daily gains) in nine months. If this was the only analysis that was used to assess the strength of the commodity, we would be led to believe that gold was perhaps entering a new phase of a larger market cycle. However, when we take a more critical look at the speculative and fundamental elements of this performance, there is reason to believe that the market’s gains are far more strained than a mere series of daily closes would allow for. And, one of the most accessible arguments against a boundless rally is the pace of gold’s climb to this point. Despite the consistency of the seven-day advance, the metal has only progressed 3.8 percent and has made modest progress in reversing the previous month’s tumble. For comparison, the equivalent run in November scaled 8 percent and developed near the end of a long-term bull wave.

From a fundamental perspective, gold’s hesitation in further is logical. Through the commodities steady climb, we have seen the backdrop of risk appetite fluctuate from positive to negative a number of times. A simplistic association of this commodity playing the role of a safe haven would lead us to believe that this is a break in a critical correlation. This is a mistaken conclusion for two reasons. The first point to make is that gold is not the perfect alternative to a risky asset. It is uncertainty in the stability of the financial markets in general that imbues the precious metal with an abnormal value that directs capital to the already expensive asset. The high volatility of exchange rates and the risk of liquidity troubles for normal investment assets highlights the metal’s unique position in the market. That being said, gold is not nearly liquid enough to stand in as its own currency; it is not acceptable payment for most other assets (you can’t easily buy stocks with gold for example), it is exposed to high volatility along and it is heavily influenced by speculators and buy only funds.

The other consideration for gold’s deviation is that risk appetite trends themselves are ill-supported. Though we have seen equities climb this past week to new two-and-a-half month highs, the advance has been choppy and the test of new levels has depressed rather than amplified momentum. If we look at the market in context, most growth-dependent assets are attempting to retrace losses suffered earlier in the year and are therefore currently drifting within a broader range. This leaves the capital market more or less range bound rather than carving a distinct trend. Considering additional purchasing for gold will come more and more from long-term sources, the draw of a meaningful trend is imperative at such heights.

Looking ahead to next week, we have to consider both the catalyst for underlying risk trends rather than short-term economic and speculative implications of event risk. Looking at this week’s economic offerings, there are more than a few indicators that can supply short-term activity; but the underlying current will be significantly altered by few releases. From the mix, the European GDP numbers are perhaps the most influential figures. Not only is this a reading of expansion, it will define Europe’s ability to survive austerity. - JK

Dollar continues goes down for Sixth Week vs. Euro, Falls vs. Pound & Yen:8/8/2010

 The dollar extended its losses against the other currencies as the macroeconomic reports continue to suggest that the US recovery is fragile and the additional stimulus may be required.

On Monday, the good reports weren’t able to aid the currency much, but boosted it slightly against the yen. Next day pushed the dollar down with the disheartening figures. The unexpectedly good employment reports on Wednesday sparked the optimism, which were removed on Thursday and turned in the pessimism yesterday as the reports showed that everything not that good with the job market in the US.
The greenback showed the same trend against other major currencies: the continuous decline for the whole week, except for Wednesday, when the currency jumped. The dollar also rose versus the yen on Monday, albeit not much.
EUR/USD rose from 1.3061 to 1.3292, advancing for the sixth straight week. GBP/USD jumped from 1.5895 to 1.5965 after falling as low as 1.5839 this week. USD/JPY dropped from 85.84 to 85.39, following the decline to the weekly low level of 85.02.
If you want to comment on the US dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

US GOLD - US gold keeps rising:6/8/2010

New York, 06 August 2010 - US futures rose again on Friday and broke through $1,200 per ounce as disappointing jobs data and a weaker dollar had investors seeking the safety of the yellow metal.

December gold closed at $1,205.30 per ounce, up $6 or 0.5 percent from Thursday’s closing price of $1,199.30 on the Comex division of the New York Mercantile Exchange (Nymex). Prices moved from an intraday low of $1,194.50 to a high of $1,213.30, the highest point since July 15.

Gold prices rallied $21.40 or 1.8 percent from last Friday’s closing price of $1,183.90 per ounce, boosted by both poor economic data in the US and expectations of greater demand in China.

Gold’s latest bounce came after today’s non-farm payrolls report showed the US economy shed 131,000 jobs last month, more than double the 63,000 expected and higher the 125,000 jobs lost in June.

The unemployment rate remained at 9.6 percent, although it had been expected to rise to 9.6 percent.

The dollar, in turn, sank to 1.3334 against the euro, the lowest point since April 30, before moving to around 1.3280.

In other precious metals, September silver climbed 15.1 cents or 0.8 percent to $18.472 per ounce on the Comex. Silver prices rose 2.6 percent this week.

However, platinum prices declined 0.4 percent and palladium prices sank 2.5 percent this week - and they both kept falling today. October platinum slipped $1.70 or 0.1 percent to $1,570.80 per ounce and September palladium dropped $8.45 or 1.7 percent to $487.60 per ounce on the Nymex.

Dollar falls but pound rise: 6/8/2010
The Great Britain pound rose versus the greenback on the report from the US about more than expected job losses. The sterling fell against the euro and the dollar as the data from the UK itself hasn’t gave many reasons for optimism. The weak US payrolls data allowed other currencies, including the sterling, to rally against the dollar. The reports from Britain were also unfavorable, though, pushing Britain’s currency down versus its other major counterparts. In June the manufacturing output expanded by 0.3 percent, the same pace as in May, while the experts predicted the 0.5 percent growth. The industrial production decreased 0.5 percent in June, compared to 0.7 percent growth in the month before and the median estimate of 0.3 percent increase.
The pound was supported previously by the hopes the actions of the Prime Minister David Cameron to rein the budget deficit wouldn’t hurt Britain’s credit rating. Now the currency is starting to feel the pressure of the uncertainty about the future decisions considering the interest rates, as the central bank’s policy makers remain split on their opinion about this matter.
GBP/USD rose from 1.5895 to 1.5960 as of 17:12 GMT. EUR/GBP went up to about 0.8312 and GBP/JPY fell from 136.45 to 136.12.
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.

Euro Falls vs. Dollar on Lower German Production:7/8/2010

The euro fell vs. the dollar after the report showed that the industrial output in Germany declined and on the speculation that the conditions on the US labor market improved.
The German industrial production fell 0.6 percent in June, while the economists expected another month of the growth after the production expanded as much as 2.9 percent in May. The US non-farm payrolls expected to fall as the temporary census workers quit job, but the number of jobs, excluding the government workers, should increase.
EUR/USD traded at about 1.3172 as of 12:23 GMT after it opened 1.3188.

Aussie Rises on Anticipation of Lower US Employment

The Australian dollar rose today and is heading for the third weekly gain versus the greenback as today’s report expected to show that the US employment decreased.
The analysts expect that today’s report would show decrease of the US payrolls by 63,000. The MSCI Asia Pacific Index of regional shares went up 0.3 percent, improving the prospects for the Australian exports. The Aussie’s gains may be limited by the subdued outlook for Australia’s economic expansion.
AUD/USD traded near 0.9171 as of 7:17 GMT after it opened at 0.9160 and fell to 0.9134.
If you want to comment on the Australian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

- Base metals traded at steadier levels close to their intraday highs in the open-outcry sessions, although conditions both on the floor and on screen were low-key, reflecting the impasse ahead the much-anticipated US jobs report for July early this afternoon. Most metals held below this week's upturn peaks, although tin hit a new 23-month peak and nickel its best since late-May.

LME LATEST - Steady metals hold around highs in open-outcry sessions, countdown to US jobs report

- All financial markets are marking time ahead of this week's key statistical release, which in previous months has set off price movements throughout all sectors. The euro was relatively stable around 1.3170 against the dollar, while European shares stood some 0.4 percent higher at midday - a similar trend is envisaged later on Wall Street.

- Copper, which traded at $7,454 per tonne at one stage, settled at $7,428, a $28 advance from the Thursday close. Resistance is seen around $7,500 - prices peaked at $7,527 earlier this week, the best for three months.

- Tin, where supplies are tightening, hit $20,774 before trading at $20,700, up $225. Nickel touched $22,280 and then held at $22,125, up $265. Zinc business at $2,128 was up $31 - earlier headline stocks fell a net 575 tonnes to 618,375 tonnes but cancelled warrants soared by some 213 percent to 65,150 tonnes from 20,775 tonnes on Thursday.

Canadian Dollar Rises :

The Canadian dollar gained today as crude oil traded near its record levels and the Canadian employers added jobs for the seventh consecutive month according to the analysts’ estimates.

Crude oil traded near $82.46 per barrel on NYMEX after it jumped to $82.97 per barrel, the highest level in almost three months. Crude oil is the main export for Canada. The analysts estimated that 12,500 jobs were added to the payrolls in the previous month, following the 93,200 increase in June. The Standard & Poor’s 500 index rose 0.3 percent.

The Canadian dollar is the best-performing currency today, a very good result considering how underperformed it was the last month. The main reason for the slack performance was the slower economic growth in the US, to which Canada ships near three quarters of its exports. Considering today’s good economic data from the US, the future looks bright for the loonie, but some economist recommend to be cautious about the loonie’s rally, as previous month gave too much reasons for the concerns to easily believe that the economy suddenly became much more stable.

Japanese Currency got Benefits :

The Japanese yen strengthened today the stocks dropped and the number of the jobless claims in the US rose more than expected, driving the investors to seek the safety of Japan’s currency.

The analysts estimated previously that the jobless claims decreased last week. The actual figure shook the markets, as it demonstrated the increase by 19,000 to 479,000. The Standard & Poor’s 500 Index declined by 0.4 percent and the Stoxx Europe 600 Index went down 0.3 percent.

The uninspiring data today reignited the speculation that the Federal Reserve would perform the monetary easing to support the struggling economy. Considering the pessimism, caused by today’s news, it’s not surprising that the yen shines in its role of the safe currency under such conditions.

USD/JPY fell to 85.87 from 86.27 as of 18:21 GMT. In the same time, EUR/JPY traded near 113.19, while GBP/JPY dropped to 136.37.

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.

The foriegn exchange market:

The foreign exchange market (forex, FX, or currency market) is a worldwide decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies.[1]

The primary purpose of the foreign exchange market is to assist international trade and investment, by allowing businesses to convert one currency to another currency. For example, it permits a US business to import European goods and pay Euros, even though the business's income is in US dollars. It also supports speculation, and facilitates the carry trade, in which investors borrow low-yielding currencies and lend (invest in) high-yielding currencies, and which (it has been claimed) may lead to loss of competitiveness in some countries.[2]

In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency.

The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

The foreign exchange market is unique because of its

* huge trading volume, leading to high liquidity
* geographical dispersion
* continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday
* the variety of factors that affect exchange rates
* the low margins of relative profit compared with other markets of fixed income
* the use of leverage to enhance profit margins with respect to account sizeAs such, it has been referred to as the market closest to the ideal of perfect competition, notwithstanding market manipulation by central banks.[citation needed] According to the Bank for International Settlements,[3]

average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, as of April 2007. $3.21 Trillion is accounted for in the world's main financial markets.The $3.21 trillion break-down is as follows:
* $1.005 trillion in spot transactions
* $362 billion in outright forwards* $1.714 trillion in foreign exchange swaps
* $129 billion estimated gaps in reporting

Posted by sanjay at 9:40 AM