Dollar Gains, Silver Sinks

The US Dollar saw a reprieve today in Asia as an early session selloff in risk helped ease the pain the greenback has been subject to as of late. Comments from ECB President Jean Claude Trichet stating that he believes in a strong Dollar coupled with him stating that he didn’t currently see any second round inflation in the EU prompted many to cut long Euro positions. The EUR/USD saw a drop from 1.4580 to lows just near 1.4490 on the back of the comments. Adding fuel to the fire was a news report stating that families across the US are feeling the pinch of inflation already, a bit of information that may be hard for the FOMC to continue to ignore. The question still remains, which nation will be the next to raise rates? With the FOMC rate decision and press statement due on Wednesday in New York, many will be hunting for clues to that question.

The majors all fell in the direction of the US dollar, with AUD/USD dropping from 1.0730 to 1.0675 and the GBP/USD losing 55 pips to 1.6450, USD/JPY remained at the bottom of an 81.95 to 81.60 range on the day. The crosses all fell lower with the EUR/JPY seeing an early drop of almost a big figure as it touched 118.50 lows early on. GBP/JPY and AUD/JPY both fell 70 and 60 pips respectively as the yen firmed against a backdrop of regional equities mostly posting in the red. A good deal of the volume could be attributed to position squaring ahead of the aforementioned FOMC meeting in the US on Wednesday.

Looking at the headline stealing metals markets, silver again had a very eventful session, however, this one in the opposite direction of yesterday’s moves. XAG/USD saw a methodical drop of over 3% today in Asia as the pair dropped from $47.00 per ounce to just near $44.60 per ounce, quite a move from yesterday’s 31 year highs near $49.83 per ounce. Gold was also softer with the firmer dollar, shedding over $13 in Asian trade to $1495.00. Heading into the London session most pairs have distanced themselves from earlier dollar highs.

Source: Forex.com

26.04.2011