Canadian and New Zealand Dollars In SigmaForex
Australian, Canadian and New Zealand Dollars Shrug Off Gains in Commodities
Despite the rise in gold and oil prices, the Australian, New Zealand and Canadian dollars continued to slide on rising risk aversion. The New Zealand trade balance came out worse than expected which added fuel to the kiwi's slide. Like the UK economy, the New Zealand economy has been deteriorating significantly with many economists calling for a possible recession and rising commodity prices is the primary reason why imports and exports are both higher. There has also been talk of a possible rate cut by the Reserve Bank of New Zealand. Meanwhile, even though there was no economic data from Australia or Canada, the intraday comments from Bank of Canada Deputy Governor Longworth were perceived as dovish - he said that inflation and growth might actually be slower than they had projected in July. Looking ahead, risk appetite and weather patterns will continue to drive the price action of the 3 commodity producing currencies.
[bank of england, business conditions, currency, dollar, economy, euro, forex, market, pips, points, rate, sigmaforex, trading
]
27 August, 2008 04:35
SigmaForex | New Pattern Of Trading
A New Pattern Of Trading?
Overall, the market has developed a trading pattern lately. A wave of orders hit the currency market soon after the Asian session opened, testing and eventually breaking important price points. Tonight was the third night in a row that this happened. After two days of dollar buying, the market now sold the dollar.
The Euro (Eur/Usd) fell more than 100 pips in the last day of trading, as business conditions in Germany, Europe’s powerhouse, deteriorated. The pair was down 180 pips at one-point, near TheLFB S3, but during the U.S. session, the pair regained some ground. The euro continued to strengthen in the Asian session, gaining 60 pips.
The Pound (Gbp/Usd) declined 200 pips yesterday, falling down to a 2-year bottom. The move came because the U.K. economy is deteriorating and the market is already pricing in a number of rate cuts coming from the Bank of England. However, the pound managed to gain 60 pips in the Asian session, reversing some of the losses from the last day of trading.
[business confidence, consumer, data, economy, eurozone, exports, forex, indicator, market, release, report, sigmaforex
]
27 August, 2008 04:28
SigmaForex | Euro Headed for a Break
Euro: Headed for a Break of 1.45
The Eurozone economy and the Euro could be in for more trouble. In yesterday's report, we warned our readers against being overly optimistic about German business confidence. Even though exports have recovered and analyst sentiment has improved, the recent drop in retail sales have kept German companies nervous. Looking ahead, we continue to expect further misses in Eurozone economic data. When an economy begins to slow, it will be reflected in more than one piece of economic data and for more than one or two months. This in turn will weigh on the Euro, which could possibly drive the currency below 1.45 against the US dollar. Although there is no major Eurozone economic data due for release tomorrow, the next big release that we are waiting for from the region is the German unemployment report on Thursday.
Since consumer spending has been the primary drag on second quarter GDP and consumer confidence, a weaker labor market would spell more trouble for the region's economy. Meanwhile, the Swiss franc has also been hit by weak economic data - the UBS Consumption Indicator dropped from 2.24 to 1.84.
[banks, broker, consumer, deposit, dollar, economy, euro, fed, federal reserve, financial sector, forex, fund, markets, orders, sigmaforex, traders
]
27 August, 2008 04:14
SigmaForex | What Drove the US Dollar ?
The Stories in the Currency Market
What Drove the US Dollar to a 6 Month High?
The troubles in the US financial sector continue to be the biggest stories of the day, driving the US dollar to a 6 month high against the Euro. The parallel moves in both the greenback and the Japanese Yen indicate that we are seeing another bout of risk aversion.
Yesterday, the story was about a Kansas Bank being shut down by regulators and today, a mortgage broker, which once originated $4 billion in loans, announced plans to close in a few weeks. This follows news from the FDIC (Federal Deposit Corp) that the number of banks on their watch list has increased 30 percent to 117. As this list grows, so does the probability of a major blow up in the financial sector. Therefore it is no wonder that risk aversion continues to drive the markets, especially as gold prices increase $4 a barrel. Although US economic data and the minutes from the latest FOMC meeting were also dollar positive, most of the action happened in Europe. Both consumer confidence and new home sales beat expectations, but traders remain skeptical about the recovery in the US economy.
The recent drop in oil prices has helped to stave off a more serious downturn, but with Hurricane Season still underway, a major storm could easily reverse that trend. As for the FOMC minutes, the Fed lowered their GDP forecasts for the second half of 2008 and 2009 and continued to warn about inflation risks. An interest rate hike will definitely be the next move that the Fed makes but the timing is still unclear. According to Fed Fund futures, the Federal Reserve will remain on hold for the remainder of the year. Looking ahead, durable goods orders are due for release on Wednesday.
