The Forex Daily Digest – October 15, 2009
The USD traded near a 14-month low against the EUR as improving corporate earnings helped global stocks rally beyond the 10,000 mark, encouraging investors to look for higher- yielding assets. The USD may fall for a third day against the yen as JPMorgan Chase & Co.’s earnings beat analysts’ estimates. The NZD gained against all of its major counterparts as the nation’s consumer prices rose more than expected.
Heightened public concern over the USD’s drop -- from finance officials in Tokyo to Brussels to Washington -- have failed to lift the dollar as investors gamble that major central banks won't back up their remarks by buying dollars.
Against other currencies like the CAD and the AUD, the USD's fall has been even more sensational. It's fallen about 6% since September against Canada's loonie, bringing both units close to the same level, and about 8% against the Aussie dollar. These declines have come despite a steady stream of official statements -- with many coming from the European Central Bank head and finance ministers in Japan and France -- in some cases saying that a strong U.S. dollar is important, while in others highlighting the greenback's weakness.
Even when the U.S. publicly backs a stronger dollar, as U.S. Treasury Secretary Timothy Geithner and White House Economic Adviser Lawrence Summers have done recently, there's a global awareness that they won't back the statements with intervention or a change in the monetary and fiscal policies that have helped drive the USD lower. That's because the U.S. economy stands to gain, at least over the short term, when the dollar drops; a weaker U.S. dollar makes U.S. exports more attractive to the rest of the world.
Euro zone finance ministers will discuss exchange rates on Monday, with concern more likely about the possibility of the euro's further rise in the future than about current levels. The euro has become almost 20 percent more expensive in dollar terms since the start of the year, rising to 14 month highs against the U.S. currency this week.
The CAD strengthened to the highest level since August 2008 after crude oil, the nation’s largest export, climbed above $75 a barrel. Canada’s dollar has a 68 percent probability of reaching parity with the USD by the end of the year. It last traded at C$1 per U.S. dollar in July 2008.
China’s exports fell the least in nine months in September and new lending grew by more than economists forecast as the world’s third-largest economy leads the recovery from the global recession. Exports declined 15.2 percent from a year earlier, the customs bureau said on its Web site today. Imports dropped the least in 11 months. The central bank said new local currency loans climbed to 516.7 billion yuan ($75.7 billion) from 410.4 billion yuan in August.
Russian Prime Minister Vladimir Putin said that Russia is not against the idea of selling its gas for rubles, and would be happy to pay in yuan for Chinese goods. Putin, speaking to reporters during a visit to Beijing, added that China has proposed discussion on launching international electronic foreign currency payments in a supranational currency.
On the economic calendar today are the Initial Jobless Claims report, the Consumer Price Index for September, the Empire State Manufacturing Index and the Philly Fed Index, and the Crude Inventories report.
Earnings include Nokia, Citigroup, Google, Advanced Micro Devices, Goldman Sachs, Southwest Airlines, and Winnebago.
Happy Trading,
James Dicks
Heightened public concern over the USD’s drop -- from finance officials in Tokyo to Brussels to Washington -- have failed to lift the dollar as investors gamble that major central banks won't back up their remarks by buying dollars.
Against other currencies like the CAD and the AUD, the USD's fall has been even more sensational. It's fallen about 6% since September against Canada's loonie, bringing both units close to the same level, and about 8% against the Aussie dollar. These declines have come despite a steady stream of official statements -- with many coming from the European Central Bank head and finance ministers in Japan and France -- in some cases saying that a strong U.S. dollar is important, while in others highlighting the greenback's weakness.
Even when the U.S. publicly backs a stronger dollar, as U.S. Treasury Secretary Timothy Geithner and White House Economic Adviser Lawrence Summers have done recently, there's a global awareness that they won't back the statements with intervention or a change in the monetary and fiscal policies that have helped drive the USD lower. That's because the U.S. economy stands to gain, at least over the short term, when the dollar drops; a weaker U.S. dollar makes U.S. exports more attractive to the rest of the world.
Euro zone finance ministers will discuss exchange rates on Monday, with concern more likely about the possibility of the euro's further rise in the future than about current levels. The euro has become almost 20 percent more expensive in dollar terms since the start of the year, rising to 14 month highs against the U.S. currency this week.
The CAD strengthened to the highest level since August 2008 after crude oil, the nation’s largest export, climbed above $75 a barrel. Canada’s dollar has a 68 percent probability of reaching parity with the USD by the end of the year. It last traded at C$1 per U.S. dollar in July 2008.
China’s exports fell the least in nine months in September and new lending grew by more than economists forecast as the world’s third-largest economy leads the recovery from the global recession. Exports declined 15.2 percent from a year earlier, the customs bureau said on its Web site today. Imports dropped the least in 11 months. The central bank said new local currency loans climbed to 516.7 billion yuan ($75.7 billion) from 410.4 billion yuan in August.
Russian Prime Minister Vladimir Putin said that Russia is not against the idea of selling its gas for rubles, and would be happy to pay in yuan for Chinese goods. Putin, speaking to reporters during a visit to Beijing, added that China has proposed discussion on launching international electronic foreign currency payments in a supranational currency.
On the economic calendar today are the Initial Jobless Claims report, the Consumer Price Index for September, the Empire State Manufacturing Index and the Philly Fed Index, and the Crude Inventories report.
Earnings include Nokia, Citigroup, Google, Advanced Micro Devices, Goldman Sachs, Southwest Airlines, and Winnebago.
Happy Trading,
James Dicks
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