Asia Session – January 27, 2011 6:30 AM
January 27, 2011
Spotlight shifts to Japan’s fiscal mess: Full text »
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Japanese Yen Drops in Currency Trading on Credit Downgrade
January 27, 2011
Is this a warning to the U.S.?
S&P, the credit rating agency, cut Japan’s rating from AA to AA-, and that is causing ripples throughout the financial markets. As a result of the cut, the Japanese yen has dropped in currency trading on the FX market.
Japan’s credit rating cut has done for the yen what Japanese officials unsuccessfully tried a few months ago — weakening the yen. It will be interesting to see, though, whether the cost is too high. Concerns about sovereign debt in Japan have been simmering in the background as Europe’s more flamboyant troubles have taken center stage.
The downgrade to Japan also raises interesting questions about what might happen with the U.S. Sovereign debt is a problem in America as well, and concerns about the irregular pace of the economic recovery have been brought to the forefront as jobless claims rise once again. Could the U.S. be the next country to see its credit rating downgraded?
See Also
- Economic News and Forex Trading
Currency trading on the FX market
Asia Session – January 27, 2011 1:17 AM
January 27, 2011
The EUR/USD remained within striking distance of a two month high of 1.3723 in quiet trading after the US FOMC stated that it remained committed to low rates in the hope of sparking employment and economic growth. This view is in complete contrast to the European Union’s recent hawkish stance and rhetoric on hiking rates in order to help keep looming inflation at an arm’s length and could keep the scales in favor of the European currency for the near term. Full text »
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New York Session – January 26, 2011 4:05 PM
January 26, 2011
The U.S. dollar had a choppy session but traded slightly lower as the World Economic Forum got underway in Davos and as the FOMC ended a two-day meeting – the first FOMC meeting of 2011. The Fed maintained its 0-25bps rate target as expected and held steady with its asset purchase program. The statement from the Fed was largely similar to that of the December 14 meeting, with a slight change in rhetoric in labor, household and business spending maintaining the view that the pace of the recovery is insufficient. The FOMC was unanimous for the first time since December 2009 – a sign that the committee is broadly in agreement for now. The Reserve Bank of New Zealand (RBNZ) also announced interest rates and held steady at 3.00% as anticipated. The bank stated that it will keep the cash rate low until the recovery becomes ‘more robust’ and inflation pressure more obvious. The overall statement was slightly upbeat noting that confidence has picked up ant forward indicators of activity have ‘firmed somewhat’. Kiwi (NZD/USD) rallied following the announcement to trade as high as 0.7720/25. Full text »
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Euro Pulls Back After Breaking Through 1.3700
January 26, 2011
Euro in forex trading
The euro pulled back in forex trading on the currency market after breaking through the 1.3700 level. The euro moved higher just after the news that U.S. home sales improved in December 2010. However, the euro is lower again in forex trading.
Even though forex traders gave the euro a boost on the currency market, attention is back on the U.S. dollar, and what could be happening with the economy. Signs of an improved economic recovery are helping the U.S. dollar.
It isn’t helping matters that there are still concerns in the euro zone about sovereign debt. However, the U.S. dollar could be facing its own government debt problems this coming year. In any case, it appears currency performance in the near future is likely to be based on which economy is perceived to be doing better.
See Also
- Euro in Forex Trading
Forex traders and the currency market
Congressional Budget Office: Deficit Will Grow in 2011
January 26, 2011
What will this do to the U.S. dollar forex trading forecast?
The Congressional Budget Office believes that the deficit will grow in fiscal year 2011. The latest analysis indicates that with spending — and with a recent tax cut extension — that we will see bigger deficits.
On top of that, the CBO thinks that economic growth in 2011 will only be "moderate". As a result, things could turn negative for the U.S. dollar. Much depends on the reaction to the FOMC policy statement later today.
The U.S. dollar forex trading forecast will depend a great deal how forex traders view the economic recovery in the U.S. — and how it compares to what is happening in the euro zone.
See Also
- U.S. Dollar Forex Forecast
Forex trading trends and forecasts
Waiting for the Fed Statement: Doves vs. Hawks
January 26, 2011
U.S. dollar slightly higher in forex trading
The U.S. dollar is slightly higher in forex trading on the currency market as hopes of an improving economy boost U.S. assets. The U.S. stock market is higher, with the Dow reaching for 12,000. Even so, though, there are expectations that the Fed isn’t quite ready to raise rates.
In order to provide you with an idea of what might happen next, Kathy Lien offers this scale, showing FOMC voters, and their position on the dove/hawk scale:
It will be interesting to see what happens next. However, since expectations are that the Fed will announce that the economic recovery is picking up pace, U.S. assets are showing improvement. Especially since the Fed is likely to maintain current policies designed to provide stimulus. The economy is growing — and the FOMC seems ready to keep it that way.
See Also
- Economy and the Currency Market
Forex trading on the currency market
London Session – January 26, 2011 6:24 AM
January 26, 2011
US and UK dominate matters: Full text »
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Asia Session – January 26, 2011 1:41 AM
January 26, 2011
The US Dollar remained pinned against two month lows amidst the backdrop of a quiet session that was dominated by the US President Obama’s state of the union address. While the Presidents speech offered no real surprises, it did propose a five year spending freeze on discretionary spending that could cut almost $400 billion from ballooning deficits. The result was a drop in US treasury yields which added to the malaise of the greenback which was still reeling from yesterday’s poor housing price data. The EUR/USD played a forty pip range for the day, threatening earlier New York highs near 1.3700 but never having the steam to break the level. AUD/USD saw a move from 0.9945 to 0.9990 on the day, earlier the pair saw 20 pips over parity for the first time in over a week. Full text »
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New York Session – January 25, 2011 4:05 PM
January 25, 2011
The U.S. dollar was slightly lower ahead of President Barack Obama’s State of the Union Address and as U.S. economic data came in with mixed results. EUR/USD briefly traded above 1.3700 and has retraced slightly to current levels of around 1.3685. GBP/USD found support around the session lows of about 1.5750 after its plummet following the negative surprise on GDP and bounced to current levels of about 1.5820. Full text »
