New York Session – June 30, 2010 5:21 PM

June 30, 2010

Risk aversion remained the dominant theme in the NY session. ADP June Employment Change started off by printing a disappointing +13k increase against expectations of a +60k increase. Next up on the data slate was Chicago PMI, which came out in line with expectations at 59.1.  As the day wore on, equities floundered between negative and positive territory before news that Moody’s was placing Spain sovereign ratings on review for a possible downgrade revived concerns about European debt.  Equities slid lower and losses accelerated in the last half hour of trading with the S&P ending down 1% on the day and 12% on the quarter, and the lowest close for the year. Full text » | Technorati | Stumble It!

U.S. Dollar Falters in Currency Trading

June 30, 2010

Dollar lower as euro gains in forex trading

The U.S. dollar is faltering in currency trading on the FX market today. The euro is gaining today as a little more optimism comes out.

However, there is a possibility that the U.S. dollar could gain the upper hand again soon, since concerns about the economy are starting to creep back. Jobs data is once again disappointing in the U.S. 

In Britain, the housing market continues to move sluggishly and consumer confidence is down. Forex traders continue to watch the euro zone, since it is far from certain that the debt situation is under control. As a result, it is quite possible that forex traders will be fleeing to the safety of the U.S. dollar again soon.

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Euro Sees Gains in Forex Trading Against the U.S. Dollar

June 30, 2010

Risk appetite makes an appearance

The euro is seeing gains in forex trading today, as risk appetite makes a small appearance. Yesterday, risk aversion was the story, but it appears that forex traders are ready for a little bit of risk today.

The euro got a little help from higher stocks in Europe. However, stocks have been volatile since the news that U.S. employment numbers are again disappointing. The U.S. stock market has moved higher, but investors are cautious, and this is limiting gains for the euro. Additionally, many are waiting to see how things go with the ECB tender offer.

While the euro is presently higher against the U.S. dollar, it is not known how long this state of affairs can last. If risk aversion once again returns, the euro is unlikely to be able to hold on to any of its gains. The euro is also a little higher against the U.K. pound.

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London Session – June 30, 2010 7:11 AM

June 30, 2010

The better tone in risk was evident from the start of the session on what is the last session of H1. Upside in EUR/USD was mirrored in EUR/JPY and in the AUD and NZD crosses vs both the USD and the JPY.  What was a moderately better tone in the EUR turned into a surge on the results of the ECB’s money market operations.   EUR/USD leapt to EUR 1.22665 on the publication of the results and continuing to drift higher into the US open. Today’s 3 mth allocation of funds coincided with the expiry of last year ‘s EUR442 bln 12 mth loan sparking speculation that demand for funds would be huge.  In the event the ECB allotted a smaller than expected EUR 131.9 bln in 3mth 1% loans to 171 bidders.  The fact that demand for funds was more modest than expected was taken by the market as suggesting that funding difficulties in the European banking sector were not as bad as had been feared.  That said financial institutions have had a long time to prepare from the expiry of the 12 mth loan and EUR 131.9 bln is still a considerable amount.  It remains probable that some banks are having difficulties funding themselves in the open market and tension in the money market is likely to remain until greater transparency makes clear how great the exposure to non-performing loans is within European banks and more pertinently which organisations are most at risk.  Full text » | Technorati | Stumble It!

Asia Session – June 30, 2010 3:37 AM

June 30, 2010

Risk remained under pressure in early Asian trade after consumer confidence unexpectedly soured in the US, adding to weakness already in motion due to poor data out of China. The EUR/USD bottomed out near 1.2165 in morning trade but eventually found its footing back through 1.2230 as investors shrugged off risk aversion and looked to get back into the oversold European currency. EUR/JPY dropped off to 107.70 lows as news spread on the continuing riots in Athens and Spain, but that pair turned around as well, hitting 108.50 highs late in the day. In essence, the Euro remained in familiar ranges ahead of the Thursday maturity of the ECB’s 12 month EUR 442B loans to its banking sector. Full text » | Technorati | Stumble It!

New York Session – June 29, 2010 5:21 PM

June 29, 2010

The S&P and the DJIA ended down 3.1% and 2.6% respectively as risk aversion returned with a vengeance in the NY trading session. The S&P dropped to its lowest level of the year below the key 1040 level before managing a late recovery and closing at 1041. U.S. consumer confidence slumped to 52.9 against expectations of 62.7 adding to market jitters that the demand for three-month cash from the ECB tomorrow will expose the weakness of European financial institutions. These factors combined with lingering concerns over weakening growth in China were the main drivers of today’s risk asset sell-off. Full text » | Technorati | Stumble It!

Risk Aversion on the Currency Market

June 29, 2010

U.S. dollar higher against European currencies, lower against the yen

Risk aversion has set in on the currency market, and the U.S. dollar is benefiting from it — at least in trading against European currencies. The U.S. dollar is once again higher against the U.K. pound and the euro in forex trading.

Greenback is down against the Japanese yen in forex trading, but that is common when risk aversion sets in. The yen is often preferred to the U.S. dollar when investors begin looking for capital preservation.

As far as forex trading against European currencies, though, the dollar is retaining its strength. With global equities lower, and with concerns over bank liquidity in Europe, it is little surprise that investors are turning to U.S. assets. As a result, the U.S. dollar is likely to retain much of its strength on the currency market in the coming weeks.

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Will the Euro Ever Regain Its Strength?

June 29, 2010

Euro Forex Trading Forecast

Once again, the euro has dropped below the 1.23 level in forex trading against the U.S. dollar. And the euro forex trading forecast isn’t calling for any significant strength anytime soon. 

Concerns about the euro zone continue, this time with a renewed focus on banks. The ECB has decided it won’t be extending special liquidity measures, and banks are concerned about this. As a result of upheaval in the European financial system, the euro is once again lower in forex trading.

In the forex trading forecast, it appears that a change is unlikely. With China’s growth slowing, it appears that global economic recovery will be moving at a snail’s pace, and risk aversion is expected to remain high. With equities around the world falling and forex traders wary of risk, the euro will be hard pressed to find strength in forex trading.

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London Session – June 29, 2010 6:38 AM

June 29, 2010

If concerns over the strength of the US recovery were not bad enough the market has now been rattled by increased fears that growth in China may be less rapid than previously expected.  These fears swept across the market following news that the US conference board had revised lower its China index.  Yields on 10 yr treasuries have pushed under the 3% level, 2 yr yields have broken below the their 2009 lows on flight to quality and the yen has managed sharp gains across the board, though there is presently signs of stabilisation vs the USD and the EUR.  This morning’s set of poor Japanese economic data increased fears regarding the resilience of the global recovery.
<SP Full text » | Technorati | Stumble It!

Asia Session – June 29, 2010 3:42 AM

June 29, 2010

Risk aversion swept into Asia today like a typhoon, sending the safe haven yen soaring and the Swiss Franc to all time highs against the Euro as investors feared the global recovery was stalling. With talk that Chinese exports will face “strong headwinds” for the second half of the year coupled with continued banking fears in the Euro Zone, the Japanese Yen made huge gains across the board today in Asia. Yen demand was accelerated with the collapse of Asian equities, most notably those in China, with the Shanghai Index lower by over 4% and the Shenzhen lower by over 5% at one point. Full text » | Technorati | Stumble It!

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