Analitics
Greenback Gains As Stocks Consolidate
* The dollar rose against its rivals on Monday and benefited from safe haven flows as US stocks fell on concerns over the banking sector. The Dow fell 43 points to 7976. US equities, having rallied for four weeks, are prone to some consolidation ahead of the upcoming earnings season. However, there remains a lot of bearish sentiment and money on the sideline so we believe any consolidation will be brief and shallow. Risk sentiment remains a main driver in the FX market and the outlook for the dollar and yen will hinge on risk appetite and stock prices. The yen fell to new yearly lows against major currencies overnight but recovered somewhat as risk aversion returned today. The Bank of Japan is expected to maintain its key interest rate at 0.10% and may announce bond purchases at its Tuesday meeting to stimulate the struggling Japanese economy. Sterling declined on increased risk aversion after failing to penetrate the resistance in the 1.49-1.50 area. The commodity currencies fell as commodity prices and equities dropped. Reserve Bank of Australia rate-cut speculation and another big drop in help-wanted ads pressured the Australian dollar. The Canadian dollar declined on a sharp fall in Canadian building permits and weaker-than-expected Canadian manufacturing PMI, increasing the risk of quantitative easing by the Bank of Canada.
Source: Hans Nilsson
06.04.2009
USD/JPY Above 100
The dollar was mostly lower versus its rivals on Friday. US nonfarm payrolls fell 663K and the unemployment surged to a 25-year high of 8.5% in March. Risk sentiment remains a main driver in the FX market and a plunging labor market did not hurt risk appetite. US stocks advanced and the Dow rose 40 points to 8018. The euro was modestly higher. The eurozone services PMI rose modestly, still indicating a continued contraction in the eurozone services industry, while German import prices posted a record yearly decline. The weak data reinforce our view that the European Central Bank is behind the curve and yesterday’s less-than-expected rate cut was a missed opportunity to forcefully stimulate the slacking European economy. Sterling gained for a fourth consecutive day against the greenback and for a sixth straight day versus the euro, as the UK services PMI rose to a 6-month high in March, adding to optimism the UK recession may be easing. The Australian and Canadian dollars rose for a fourth consecutive day on better risk appetite.
Source: Hans Nilsson
03.04.2009
Dollar and Yen Fall as Risky Assets Rally
The dollar and yen fell as risk appetite improved, global equity markets rallied and the G-20 pledged more than $1 trillion in emergency aid to combat the global recession. The Dow rose 216.48 points to 7,978.08 on optimism the worst of the world recession may be ending and accounting regulators relaxed mark-to-market rules. The yen fell versus all major currencies on improved risk sentiment. The USD/JPY rose to the highest level since November but failed to break resistance at 100. The euro rose after the European Central Bank surprised markets by cutting the benchmark rate only by 25 basis points and said the eurozone economic outlook is “broadly balanced.” Sterling gained after the UK construction PMI and house prices unexpectedly rose in March. The Canadian dollar advanced as oil rose the most in three weeks.
Source: Hans Nilsson
02.04.2009
Waiting for G-20 Meeting
* The dollar was little changed on Wednesday before the G-20 meeting of global leaders in London and the European Central Bank’s interest-rate decision on Thursday. Market expectations are fairly low for the G-20 meeting, but a failure could increase risk aversion and spark selloffs in the equity market. However, we believe the international leaders will announce plans to combat the global recession and introduce proposals for new global financial regulations to satisfy low market expectations. US economic data were mixed today. ADP predicts record job losses for March and so does our leading employment indicator. However, the labor market always lags the recovery and the ISM manufacturing report showed a positive side with new orders rising strongly. This is more important as the ISM manufacturing index is a leading economic indicator. US construction spending and pending home sales were better than expected. Signs of a US economic recovery supported stocks and the Dow rose 153 points to 7762. The yen fell after the Tankan report showed Japanese business confidence fell to a record low, but pared losses as support held. Sterling rose as the UK manufacturing PMI showed signs of an improving outlook for the UK manufacturing sector. The Canadian dollar fell as crude oil prices dropped after a report of higher-than-expected petroleum inventories. The AUD/USD advanced to the 0.70-area resistance supported by improving building approvals and firming manufacturing PMI.
Source: Hans Nilsson
01.04.2009
US Pressure on Automakers Spurs Haven Demand
* The dollar rose against its rivals except the yen on Monday as stocks fell the most in three weeks and risk appetite declined. The Obama administration gave ultimatums to General Motors Corp. and Chrysler LLC to restructure their operations, possibly including a bankruptcy filing, or be denied further government aid. Global stocks fell on concerns over the financial and auto industries. The Dow fell 254 points to 7,522. The yen gained versus all major currencies as risk aversion increased. The euro dropped as eurozone economic confidence plunged to the lowest level since records started in 1985. Sterling fell for a fourth day on increased worries on the financial sector. The Australian dollar declined as risk appetite and commodity prices fell.
Source: Hans Nilsson
30.03.2009
Yen’s Decline Continues
* The dollar traded mostly higher on Thursday. US final Q4 2008 GDP contracted 6.3% q/q and continuing jobless claims jumped to a new all-time high of 5.56 million. The GDP was revised down less than expected and claims are lagging at economic recoveries, so the reports had limited impact on the trade. US stocks rallied again; the Dow Jones Industrial Average increased 2.3% to a 6-week high of 7,925. The USD rose against the European currencies despite higher equity prices, possibly signaling the dollar is starting to benefit from an earlier recovery than other economies. The last few months the greenback traded inversely to the direction of equities and risk sentiment. The euro declined after German consumer confidence fell for the first time in seven months. Sterling declined as UK retail sales posted the largest month-on-month drop since June, adding to evidence the UK recession is deepening. The Australian and Canadian dollars, supported by better risk appetite, however, were unable to push through technical levels. The commodity currencies have been trading in a narrow range the last four days; the USD/CAD is testing the 1.22-area support and the AUD/USD is testing the 0.70-area resistance. If these levels are broken, the Australian and Canadian dollars will continue their recent rallies.
Source: Hans Nilsson
26.03.2009
Dollar Mixed on Signs US Economy Is Bottoming
* The dollar traded mixed on Wednesday after better-than-expected US data on durable goods orders and new home sales reduced safe haven demand for the USD. Greenback fell versus the euro and yen after Treasury Secretary Timothy Geithner showed some openness toward China’s plan for a SDR linked reserve currency, but clarified his remarks saying that the US will take measures to keep the dollar the world’s reserve currency. The yen rose following three straight days of losses as Japan recorded its first trade surplus in five months, despite a record 49% y/y decline in exports. Imports fell a record 43% y/y. The collapsing trade indicates a deepening problem for the Japanese economy; thus, we are buying the USD/JPY. Sterling fell as UK CBI retail sales dropped sharply and today’s fixed income auction failed to attract enough bidders for the £1.75 billion of gilts despite the Bank of England’s quantitative easing policy. UK PM Gordon Brown said his government will do whatever is necessary to revive economic growth, with global deflation the main danger in the short term. The Australian and Canadian dollars were little changed, unable to push through technical levels as risky assets consolidated recent gains.
Source: Hans Nilsson
25.03.2009
Sterling gains
* The dollar rose against most major currencies on Tuesday as US stocks consolidated Monday’s rally. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben S. Bernanke, in testimony to a House Financial Services Committee hearing today in Washington, seek new power to wind down failing financial companies after the government’s rescue of American International Group Inc. Despite increased risk aversion and declining US stocks, the yen was pressured by the deepening recession and increased deflation risk. Lack of domestic investment alternatives will likely induce Japanese households to start investments abroad again. The euro fell to the 1.35-area support after European Central Bank members said the ECB could consider quantitative easing as a last resort. The Australian and Canadian dollars declined modestly, unable to push through technical levels as commodity prices consolidated recent gains.
Source: Hans Nilsson
24.03.2009
Treasury’s $1 Trillion Banking Plan Increases Risk Appetite
* The dollar fell versus its rivals except the yen on Monday as surging US stock prices encouraged investors to move away from safe haven bets in favor of more risk. The Obama administration revealed its long awaited private/public plan to remove banks’ toxic assets. The yen fell more than the greenback as risk appetite rose on optimism the plan could revive the US financial system without resorting to outright nationalization of banks. Despite increased risk aversion, the euro and sterling’s gains were moderate. Last week all currencies benefited from the risk that the Fed’s quantitative easing policy could debase the greenback; this is still a longer-term risk. The dollar may be supported by signs that the US economy will recover before the eurozone and other economies. Our leading economic index indicates that equity prices have bottomed and the US economy will recover in Q3 as we reported on March 9. This weekend’s update of the Globicus LEI confirms the predictions. The Canadian dollar rose as crude oil prices advanced to the highest level in almost four months. The Australian dollar gained as risk appetite and commodity prices increased; the aussie is testing significant resistance in the 0.70-area.
Source: Hans Nilsson
23.03.2009
EUR/USD Consolidates Huge Gains
* The dollar rose on Friday and pared some of the sharp losses sparked by Wednesday’s Fed announcement that it will expand its balance sheet by over 1 trillion buying government and corporate bonds. However, the technical outlook for most of the key currencies improved during the week with their best weekly performance in many years against the greenback. Despite today’s stock-market consolidation, the yen fell and its decline will likely continue. The EUR/JPY tentatively broke important resistance. Sterling fell today but broke its downtrend this week. The USD/CAD, unchanged today, broke important support this week indicating further losses. The Australian dollar gained modestly today and advanced for a third week as risk appetite and commodity prices increased.
Source: Hans Nilsson
20.03.2009
Go to page:
Currency Charts