Yen, Dollar Down Across the Board in FX Trading

Massive selling of safe haven currencies

Today is being marked by its massive selling of safe haven currencies. Both the Japanese yen and the U.S. dollar have been strong recently as forex traders have sought capital preservation over high returns. Now, though, the story is changing.

As swine flu worries diminish, safe haven currencies are not in as great demand. Both the Japanese yen and the U.S. dollar are dropping in FX trading as risk comes back in vogue and many forex traders turn to the euro and the down under currencies.

The U.S. dollar is also being hurt by the fact that economy has shrunk in Quarter 1 of 2009, and the euro zone appears to be stabilizing.

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• U.S. Dollar in FX Trading
  News, information and analysis for forex traders

U.S. Dollar Lower in Currency Trading

Greenback drops to euro in forex trading

The U.S. dollar has moved lower in currency trading on the FX market today. With swine flu concerns largely diminishing, the focus is being moved away from safe haven trading to some cautious risk taking. The news that the euro zone economy appears to be stabilizing, combined with the news that the U.S. economy shrunk 6.1% in Q1, is making for a euro rally in forex trading on U.S. dollar weakness.

There are still some small concerns that swine flu could have an impact on global trade, but so far G10 nations haven’t been largely affected. Most of the deaths remain confined to Mexico, with only one U.S. death. Confidence appears to be the watchword today, and it is seeing more success that fear over swine flu. And with confidence brings less focus on the U.S. dollar.

See Also

• U.S. Dollar Technical Analysis
  U.S. dollar weakness in currency trading
• U.S. Dollar in Currency Trading
  Forex trading on the currency market

Euro Rallies in Forex Trading

U.S. economy, reduced concern over swine flu prompt euro rally

The euro is rallying in forex trading right now, blowing by the 1.3200 mark as economic data and reduced concern over the swine flu favor risk appetite. The U.S. economy was shown to have contracted in Q1 of 2009. This news was contrasted with better than expected data out of the euro zone, reports Boris Schlossberg in FX360:

On the economic front the EZ Retail PMI numbers proved supportive to euro bulls printing at 48.9 versus 44.4 the period prior. The sharp jump was yet another piece of evidence that economic conditions in the region are beginning to stabilize, at least for the time being.

Additionally, with only one U.S. death due to swine flu, concerns are diminishing. The G10 nations don’t seem to be economic affected by the outbreak, and global trade is no longer expected to be significantly impacted by the swine flu. This is allowing some tentative recovery for the euro in forex trading.

See Also

• Euro in Forex Trading
  Currency trading on the FX market

U.S. Economy Shrinks in Quarter 1 2009

U.S. economy contracts 6.1%

The U.S. economy remains in a state of contraction at the close of Quarter 1, 2009. The U.S. economy has shrunk 6.1% in Quarter 1. The rate of the decline is not quite as bad as the 6.3% at the end of 2008, but it was still much worse than expected. Economists had expected a decline of 4.3%.

Consumer confidence is slowly returning, and that is expected to help the economy going forward. This last quarter, the main drag on economic growth was the lack of business investment. However, there are some hopes that business investment will pick up as consumer confidence improves. 

Moving forward, it will be interesting to see whether economic stimulus measures passed by the U.S. government will have an effect on the economy, spurring growth and leading to the beginning of a recover from this recession.

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• U.S. Economy and the U.S. Dollar
  Currencies in forex trading

London Session – April 29, 2009 6:50 AM

A better tone in stock markets, a higher EUR and a softer JPY provided evidence of a less pessimistic outlook during European hours.  Relief stemming from a slew of earnings reports in Europe this morning and hopes that like SARS, Swine Flu will not take a heavy toll on global economic growth are behind this morning’s better tone.  Facilitating the better tone in the EUR have been this morning’s round of better than expected confidence releases in the Euro zone.  Consumer confidence and industrial confidence both in the Euro zone both showed signs of improvement in April.  While the EUR has found support in data suggesting that both the US and the Euro zone economies may be stabilising, news that Swine Flu has been contracted by many students in NY and that the US has registered its first death from the virus could inject a cautious tone into the EUR’s rally during US hours.  At present EUR/USD is faltering at the 1.3240 resistance, a break of this level hints at a move to 1.3290 though a significant ebbing down of the Swine Flu risk will likely be needed before a move back towards the 1.3500 area.  Similarly USD/JPY is presently stalling at the 97.10 resistance suggests the possibility of renewed caution amongst investors.  Following yesterday’s run up sterling has had a quiet session in London with EUR/GBP contained for the most part between 0.8970 and 0.8970.   More news from the UK housing market is due this week and could provide further direction Full text »

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Asia Session – April 29, 2009 1:33 AM

Some risk appetite returned to the marketplace today in Asia as US equities shrugged off flu fears early and traders felt a little more confident as Asian equities rallied. With Japan out on holiday for the beginning of the Golden Week celebrations, trading was subtle, but the directions were clear as the Yen and Dollar lost favor and the Crosses gained ground as the FX markets continued to reflect moves in equities. USD/JPY climbed higher from the opening lows of 96.37 to reach highs of 97.04, and the EUR/JPY followed the same path, opening near lows of 126.21 and reaching highs of 127.92. All yen crosses bounced back as investors bought the riskier assets as hope surfaced that the swine flu death tolls as well as the global economy were seemingly stabilizing. However, it would be safe to say that the extent of this possible pandemic would be hard to gauge for the average person. On the economic front, a better than expected US consumer confidence number of 39.2 as opposed to 29.7 helped pump enthusiasm into the riskier assets. EUR/USD made a nice run straight up in Asia, from 1.3121 to just over the 1.3200 levels as London opened for business. Notable data for tomorrow in the US the FOMC will release its statement at 18:15 GMT and the target rate should remain 0.00% – 0.25%……. Full text »

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New York Session – April 28, 2009 4:29 PM

The NY session witnessed some very mixed price action as better economic data could not calm fears about more financial woes and swine flu concerns continued to lurk. US consumer confidence jumped to a much higher than expected 39.2 in April from 26.9 prior. The expectations component also showed a marked improvement and this bodes well for consumer spending going forward. News that two major US banks will need more capital (one estimated as needing billion or more) and some new cases of swine flu kept risk trades at bay, however. US equities shed -0.27% after spending most of the session moving in and out of positive terrain. Gold was lower and near the middle of the 884/907 range ostensibly on some heavy gold ETF selling in the eurozone. Full text »

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Down Under Currencies Drop in Forex Trading

Aussie, kiwi lower on swine flu concerns

Down under currencies are well known for the support they get in forex trading from exports and good global trade. Unfortunately for the Aussie and the kiwi, there are worries over the state of the world economy, and what is likely to happen if this swine flu scare restricts trade.

Risk aversion is on the rise, and the carry trade is unwinding, sending the Japanese yen higher against the currencies that normally employ the carry trade. Bloomberg reports on the factors hampering down under currencies in forex trading today:

“Higher risk aversion is being prompted by persistent concern over swine flu,” said Sue Trinh, senior currency strategist at RBC Capital Markets in Sydney. “You’ve also got that Wall Street Journal article headlining that Citibank and Bank of America are being pushed by U.S. regulators to raise more capital. That’s definitely causing this next leg down.”

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• Aussie, Kiwi in Currency Trading
  World currencies in forex trading

Canadian Dollar Forex Trading Forecast

Loonie in currency trading

The Canadian dollar forex trading forecast looks to be one of short-term building strength as focus shifts to underlying U.S. fundamentals. However, it is likely to take a little time for the loonie to consolidate its strength in currency trading, since risk aversion is on the rise due to concerns that the swine flu will restrict global trade and tourism.

Right now, USD/CAD is testing a support level. FX Street reports on the Canadian dollar forex trading forecast:

Canada’s dollar strengthened from a three-week low as easing concern about the level of capital at US lenders overshadowed the BoC’s reduction in its key interest rate to a record low. CAD fell 0.9% earlier after the Canadian central bank cut its target rate for overnight bank loans to 0.25%—the lowest since the institution was established in 1934. Expect the Loonie to remain strong in the midst of adjusting US risk outlook and the future prospects of GM & Chrysler.

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• Loonie in Currency Trading
  Forex trading with world currencies

Sterling Recovers Slightly in Currency Trading

U.K. pound in forex trading

Sterling is experiencing a certain degree of relief in currency trading on the FX market this morning. The U.K. pound is slightly higher against the U.S. dollar and the euro in forex trading. 

Protection for the sterling is being offered by some marginally positive British economic data, as well as an auction of U.K. government bonds. However, overall economic data remains weak, and there are concerns about the debt that the British government is incurring during economic stimulus efforts.

Unless some risk appetite can be seen soon (as the swine flu scare declines), however, there is little that the sterling can do to maintain its place in currency trading. This is likely a short-lived recovery.

See Also

• Sterling in Currency Trading
  World currencies on the FX market

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