The dollar advanced versus the euro and yen in Asia forex market on Monday, the first day of trading in the new year, on speculation U.S. fiscal stimulus and the global gains in stock market will encourage U.S economy and give investors incentive to buy higher-yielding assets.
The yen fell for a third day against the dollar and the euro to reach 93.38 and 128.53 accordingly after Barack Obama, the new U.S. President-elect, shaped a package of infrastructure spending and tax cut and that will eventually create 3 million jobs.
The USDJPY will meet first resistance at 93.42 ahead of 95.20. Initial support lies at 91.62 a breach will target 90.83 as next level.
The euro slip to two-weeks low on U.S president-elect plan and on speculation the ECB will cut interest rate as signed by the European Central Bank Vice President Lucas Papademos. Trade FX believes that the EURUSD tackles support at 1.3650 ahead of 1.3505. Resistance at 1.3971, last Thursday’s low and 1.4057, Friday’s high.
The British pound keeps falling against the dollar after U.K report showed mortgage approvals and manufacturing shrank. Versus the euro and after weakening to record low, the pound was little changed. At Trade FX we estimate that the pound will keep the negative trend versus the dollar and the euro as there is a wide consensus that the BoE will slash the rates again.
The GBPUSD has set 1.4695 as minor resistance, where Dec 31 high was made. But support will be test at 1.4430. A breakthrough will target next level at 1.4362, last year’s low.
The dollar dropped versus the euro in European forex market on improved risk appetite but advanced against the yen which got hammered due to latest round of intervention fears by the Bank of Japan.
The forex market is been captured in a narrowed liquidity due to Christmas holiday soon, of which Bank of Japan might take advantage of these poor trading condition to intervene and depreciate the yen.
Against the euro, the greenback continued weakening for a second day on speculation the US home sales report will show another decline to the lowest levels in more than 17 years. The euro climbed to 1.4021 earlier this morning benefiting a little from continued risk appetite and assuming the euro zone is still uncertain whether to cut its interest rate any further below 2.5%
Technically, Trade FX says that if the euro slip through $1.3905 will go ahead to test $1.3825, last Friday’s low. On the other direction, minor resistance spotted at $1.4050 ahead of Monday’s high of $1.4125
The USDJPY recovery from yesterday, will tackle a minor resistance at 90.50 ahead of 90.95 which might be reached soon, Trade FX says. On the support side, 87.85 has almost been tested today. A breach will target 89.22 as next support is of Dec. 17 high.
The British pound weakened for the second day versus the euro on speculation that the bank of England will lower interest rapidly to boost the economy and bail it out of a recession. And after GDP report showed that UK’s economy has shrank more than expected in the 3rd quarter, the pound declined versus the dollar to reach 1.4770. Trade Fx says that $1.4693, Monday’s low, may be tested soon.
The yen climbed versus the US dollar and the euro in the forex market on speculation s global recession will be aggravated what prompted traders to reduce holding higher-yielding assets funded in Japan.
On concern that the Federal Reserve’s $800 billion plan to defreeze credit markets will fail to prevent a prolonged economic slump, the yen gained profits also against the Australian dollar and the British pound. Government data yesterday showed that the US economy shrank in the third quarter by 0.5% as consumer spending slipped the most in almost three decades.
Trade FX expects the yen to remain supported and keep gaining versus major currencies on expectation the global economy slump will deepen.
The yen rose versus the dollar from 96.66 levels yesterday to 94.90 today in the European session. Versus the euro from 125.83 yen to 122.86.
The Australian and New Zealand dollar advanced for the third day to touch the highest in more than a week against the greenback as forex traders doubt any success for the Fed’s multi billion dollar plan to bail out the credit market crunch.
In UK, the pound eased against the US dollar from $1.5530 levels, 15 days’ high, to $1.5310 as consumer spending plunged the most since 1995 and investment decline in the third quarter as the economy deteriorated towards UK’s first recession in 16 years. Trade FX thinks that the pound will continue sinking down break again the $1.50 levels as on speculation the UK economy will keep shrinking and bank of England will cut interest rate further.
The euro gained for a 3rd day versus the greenback on new US data that eased concerns about the financial market crisis. Also the euro advanced after US GDP report release, and US house prices data accelerated the dollar downtrend.
The euro reached $1.3070 levels yesterday in New York, 26 days’ high, before easing down today to $1.2927.
It seems that the U.S. Treasury bailout for Citigroup fails to improve global risk sentiment, as the dollar in the forex market is traded lower today. Risk Aversion is rising despite Citi’s aid and Oil prices’ drop. (more…)
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The dollar rose on Tuesday’s trading at the FX market as oil prices keep declining and stock market create risk queasiness subject to the high volatility (more…)
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