New York Session – November 30, 2011 4:12 PM

November 30, 2011

Risk appetite soared today as key central banks acted to provide liquidity by lowering interest rates on dollar swaps. The Fed, ECB, SNB, BoE, BoC, and BoJ announced they will lower the swap rates by 50 bps starting December 5 and extending swap lines to February 2013. The action was very supportive of risk which was given an earlier boost as China announced it will cut the reserve requirement ratio by 50 bps effective December 5 in a move to ease policy. Major economic data released in North America added to the positive sentiment with much better than anticipated Canadian GDP (3.5% q/q annualized vs. exp. 3.0% and prior -0.5%) while in the U.S. the ADP report showed that 206K jobs were added in Nov.  (cons. 130K). The positive employment data comes ahead of tomorrow’s weekly jobless claims and Friday’s official BLS report. Full text » | Technorati | Stumble It!

US Dollar Plummets as Central Banks Coordinate Efforts

November 30, 2011

Greenback in currency trading

The US dollar has plummeted in forex trading on the currency market today, following a coordinated effort by some of the world’s major central banks to increase liquidity.

The Federal Reserve, European Central Bank, Bank of Canada, Bank of Japan, Swiss National Bank and Bank of England, have all decided to increase the dollar swaps that allow for cheaper funding around the world through 2013.

This increase in dollar liquidity is, of course, a weakening factor for the US dollar. Greenback is much lower in currency trading as the dollar index falls rapidly, and as markets respond favorably to the move.

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China Cuts Reserve Requirement

November 30, 2011

Aussie surges on Chinese decision

While the rest of the world was focusing on the major central banks’ decision to increase dollar liquidity through swaps, China was quietly cutting its reserve requirement ratio. Effective Monday, the reserve requirement ratio is cut by 50 basis points.

The news has been somewhat lost in the clamor over the coordinated effort by central banks, but it has had an effect. Australia, which relies quite a bit on China, has seen its assets appreciate noticeably.

The Aussie is higher in forex trading, surging as China becomes more liquid, and as risk appetite in general rises. The combined moves are designed to boost markets, and the weakness that will result for the dollar is helping commodities like gold, and boost currencies like the Aussie. 

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Asia Session – November 30, 2011 1:08 AM

November 30, 2011

Risk has taken a hit today after S&P took action against 37 banks, most of them in the US. This prompted a sell-off of banking stocks across the board and reversed the risk-on sentiment we witnessed throughout most of the US session. Full text » | Technorati | Stumble It!

New York Session – November 29, 2011 4:09 PM

November 30, 2011

The buck was softer across the board as risky assets continue to move higher. Equities extended gains with European bourses closing to the upside while in the U.S. the DJIA finished up about +0.28% and the S&P 500 climbed by nearly +0.22%. Eurozone Finance Ministers met today and approved the sixth tranche of aid to Greece. The EU approval of the €8B installment was largely expected and did not see much of a reaction in FX markets. EUR/USD was chopped around earlier as it saw a squeeze towards the 1.3440 area after an Italian auction which saw decent demand but higher yields. The pair tumbled back below the 1.33 figure shortly after reports that the ECB did not fully sterilize bond purchases. The focus will remain on the headlines coming out of the EU meetings with the Ecofin tomorrow as officials continue to debate the issue of leveraging the EFSF. Full text » | Technorati | Stumble It!

London Session – November 30, 2011 7:48 AM

November 30, 2011

China strikes while the iron is hot





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Euro Heads above 1.34 before Falling Back in Forex Trading

November 29, 2011

Euro lower against the US dollar

Euro broke through the 1.3400 level earlier in the session, gaining against the US dollar. The boost came after the Italian bond auction was considered a success, and on the heels of yesterday’s gains by riskier assets.

However, the enthusiasm for the euro has been short-lived. Already, the euro is back below the 1.3400 level. Indeed, euro is down against the US dollar on the session, moving to 1.3305 at 9:06 a.m. Eastern, down from the open at 1.3319.

Even though the Italian auction was considered a success (most of the debt was sold), there are still problems with the eurozone. Indeed, there is recognition of the fact that eurozone troubles are far from over.

As a result, even though currencies like the Aussie and the pound are gaining against the US dollar today, the euro is being left out of the party, struggling against the greenback. 

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Aussie Makes Strides in Forex Trading

November 29, 2011

Australian dollar breaks above parity in currency trading

Aussie is heading higher in forex trading today, following yesterday’s gains by high beta currencies. The holiday shopping season, and optimism about Europe, are helping high beta currencies right now on the FX market.

Indeed, the Aussie broke above parity with the US dollar earlier today, with AUD/USD moving above 1.0000. Aussie has since fallen back below that level, but is still higher on the session.

Also helping the Australian dollar is support from gold prices, as well as hopes that the successful Italian bond auction is a sign that things are working themselves out in the eurozone. 

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Asia Session – November 29, 2011 1:34 AM

November 29, 2011

Asian equity markets followed the lead of their counterparts in Europe and North America, with gains on average of around 0.8% for the region. The rally is largely due to the possibility that a plan might emerge between Germany and France that would allow for tighter European budget controls, which could pave the way for more aggressive intervention from the ECB into the troubled sovereign debt markets and possibly even allow for the creation of some form of Eurobond. Germany has stated in the past that closer fiscal integration is needed before Eurobonds can be considered, and this would definitely be a step towards this end for the Eurozone. Full text » | Technorati | Stumble It!

New York Session – November 28, 2011 4:08 PM

November 28, 2011

The USD and JPY were significantly weaker as risk appetite gained on optimism that Europe’s leaders may be closer towards a resolution. (Haven’t we heard this before?) The euro traded higher against most of the majors except the commodity currencies despite a lack of clarity as rumors circulate on policy action and structural reforms ahead of tomorrow’s Eurogroup meeting and Wednesday’s Ecofin meeting. The EU’s Van Rompuy and Barroso met with President Obama in Washington. Obama urged the European leaders to take ‘decisive action, conclusive action’ that Europe is capable of. EUR/USD advanced to session higher of just under the 1.34 figure before correcting lower to current levels of around 1.3300. Full text » | Technorati | Stumble It!

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