New York Session – August 31, 2010 4:03 PM

August 31, 2010

The NY session was busy with a slew of economic data released. The data for the most part came in mixed for the U.S. and disappointed in Canada. Canada’s Q2 annualized GDP came in weaker than the anticipated +2.5% at +2.0% (prior +5.8% revised lower from +6.1%). This supports the view that the Bank of Canada is likely to pause on interest rates at its September 8 meeting and saw the Loonie weaken as USD/CAD rallied to around 1.0675 before running into a significant technical resistance level. Declining oil prices also weighed on the Canadian dollar as oil slid by roughly -3.86% on a weakening growth outlook. Full text »

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Euro Gets a Little Help in Forex Trading

August 31, 2010

16-nation currency on the FX market

The euro is getting a little help today in forex trading on the currency market as a relief rally is under way. Even though overall euro zone unemployment remains rather high, euro is getting a boost from the fact that Germany saw some improvement.

As the largest of the euro zone economies, Germany has a great deal of influence on the direction of the euro. However, disparities between countries like Germany, and countries like Spain, could cause problems in the long run for the euro zone economy.

So for, though, the euro is staging a rally in forex trading, even though other currencies like the pound and the Aussie are falling to the U.S. dollar.

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Will Slowing Economic Growth Undermine the U.S. Dollar?

August 31, 2010

Greenback in forex trading

It appears that slowing economic growth is likely to undermine the U.S. dollar going forward. Even though the greenback has been a safe haven currency in forex trading, it needs strong fundamentals in order to find support going forward.

Right now, that means signs of economic growth. Indeed, GFT’s Kathy Lien reports in FX360 about the importance of economic recovery in helping the U.S. dollar in currency trading:

There is no question that growth is undershooting everyone’s expectations and without additional stimulus, it could continue to do so which is the greatest risk for the U.S. dollar.

Long term, though, there is a chance that all the stimulus could come back to haunt the greenback. After all, if debt gets out of hand, there could be other fundamental problems down the road.

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London Session – August 31, 2010 8:35 AM

August 31, 2010

Risk aversion continued overnight as Asian stock markets traded lower. The Nikkei 225 plunged by -3.55% experiencing its largest percent drop since early June as investors fear that a stronger yen will hurt the export-driven economy. The U.S. dollar traded mostly mixed, the yen remained at elevated levels, and the Swiss franc was the most notable having outperformed the safe haven currencies. EUR/CHF fell to new records lows touching just under 1.2900 and USD/CHF is nearing 2010 lows on a strengthening franc. USD/CHF has so far made session lows around 1.0175. Full text »

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Asia Session – August 31, 2010 12:54 AM

August 30, 2010

The yen continued to firm today in Asia defying Japanese authorities who are trying to stem the recent appreciation of the Japanese currency. With a poor showing for equities in the US that carried over to stocks in Asia, traders continued to buy the yen as a play on risk aversion. USD/JPY dropped off of the 84.65 high earlier to erode to 84.20, still way off of last week’s lows of 83.58. Japanese Finance Minister Noda was on the air beating the same drum in saying that FX moves were one sided adding that disorderly FX moves could harm the economy. No one seemed to be listening. With the Nikkei down over 3% and risk notably off, the yen crosses all took a dive lower with the EUR/JPY shedding almost 70 pips to 106.50, GBP/JPY falling about 75 pips to 130.20, and the CAD/JPY dropping 250 pips since this time yesterday to find a bottom at 79.50. With Noda’s comments that the government will take “decisive action” in currencies, traders are now whispering that the 80.00 level may be the Alamo for the Bank of Japan as far as defending the yen. Full text »

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New York Session – August 30, 2010 4:21 PM

August 30, 2010

Risk came off and the dollar strengthened as stocks fell ahead of this week’s U.S. labor data. EUR/USD fell from session highs around 1.2770/75 to session lows around 1.2660 where it is currently trading. Yen-crosses traded lower during the NY Session on increased risk aversion and disappointment from the BOJ’s overnight actions. The BOJ announced it will inject 10 trillion yen of liquidity in additional quantitative easing measures. The currency market shrugged off the news as they did not view it as aggressive enough. The BOJ did not do enough to stop the rise of the yen as the JPY-crosses corrected after the initial knee-jerk move higher following the announcement of the boost in the lending facility. While it is encouraging that the BOJ seems to be moving in the right direction, the response from the central bank was underwhelming and came as a disappointment. Full text »

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Drilling down on the Markets

August 30, 2010

Insight on currencies and commodities, with Boris Schlossberg, GFT Forex, and Peter Beutel, Cameron Hanover.

London Session – August 30, 2010 9:49 AM

August 30, 2010

The BOJ dominated headlines as it injected 10 trillion yen of liquidity in additional quantitative easing measures. While this move saw the Nikkei 225 surge by about +1.76%, the currency market shrugged off the news as they did not view it as aggressive enough. The BOJ did not do enough to stop the rise of the yen as the JPY-crosses corrected after the initial knee-jerk move higher following the announcement of the boost in the lending facility. While it is encouraging that the BOJ seems to be moving in the right direction, the response from the central bank was underwhelming and came as a disappointment. Full text »

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U.K. Pound Higher in Currency Trading

August 30, 2010

Sterling gains in forex trading

Sterling is making solid gains today in currency trading on the FX market. The U.K. pound is strengthening on improved economic news, and the fact that Britain’s economic position seems less precarious than the U.S. position.

Action Forex offers this interesting comparison between the U.S. and Britain:

[T]he Cable is also benefitting from a revised GDP which was a basis point above analyst expectations. King has been more hawkish than Bernanke and the UK’s solid economic performance allows the BoE to maintain its neutral stance as the Fed widens.

Ben Bernanke‘s pledge on Friday that the U.S. economy will be propped up seems only to indicate that weakness remains. However, more economic data is expected out of Britain and out of the U.S. tomorrow, and that will provide forex traders some food for thought as they continue to decide between the sterling and the U.S. dollar.

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U.S. Dollar Mixed in Forex Trading

August 30, 2010

Currency trading with the U.S. dollar

The U.S. dollar is mixed in forex trading on the currency market today. The U.K. pound is moving higher against the U.S. dollar right now, as is the Japanese yen. The yen’s strength comes in spite of the latest move by the Bank of Japan to expand its quantitative easing program in an attempt to slow yen appreciation.

Greenback is higher in currency trading against the euro, though. This is a little surprising, since confidence in Europe is on the rise. Many had expected the euro to get a bit of a boost. However, problems like tight credit, unemployment and sovereign debt continue to plague the euro in forex trading. Greenback is also higher against the Australian dollar.

It will be interesting to see how things go today. More economic news is expected, and forex traders will be waiting to see what the Fed has in store for the economy, after Friday’s promise from Ben Bernanke to shore up the U.S. economy.

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