The Forex Daily Digest – December 16, 2009
Investors turned bullish on the USD for the first time since March as the U.S. economy showed evidence of a sustained recovery. The Fed is likely to leave the bank's short-term interest rate target intact at 0% to 0.25% at the end of the FOMC meeting today, and is not expected to significantly change language in its statement promising not to raise rates for a very long time. Yesterday, the USD rose to the highest level in more than two months as stronger-than-expected U.S. economic reports lifted the dollar.
The AUD was down against the USD, after data showed Australia's economy grew in the third quarter at a slower pace and below market expectations, because of declines in private investment and net exports. Deputy Governor of the Reserve Bank of Australia reportedly said that Australian monetary policy has returned to a normal range, and that the current level of deposit rates, housing loan rates and business loan rates would have been consistent, before the crisis, with a cash rate of at least 4.75%. The rate is now at 3.75%.
The CAD gained against most of its major counterparts as crude oil, the nation’s biggest export, snapped its longest decline since 2001. The CAD’s appreciation versus the JPY was its biggest one-day gain against Japan’s currency on a closing basis since Dec. 4th, when a U.S. report showed job cuts fell to less than 1/10 of economists’ median estimate. The CAD was the third-best performer against the USD among the 16 most-traded currencies.
The GBP climbed against the EUR as data showed U.K. inflation accelerated to the fastest pace in six months in November, weakening the case for the Bank of England to keep its key interest rate at a record low. Sterling also strengthened against the yen. Consumer prices increased 1.9 percent in November from a year earlier.
And the Bank of Japan’s fixed rate three-month fund supplying operation attracted total bids of 6.8 trillion yen ($75.92 billion), more than eight times the amount offered. Total bids were 6.7863 trillion yen and bids accepted totaled 801.4 billion yen.
Federal Reserve Chairman Bernanke, in a response to a lawmaker's questions made public this week, said the U.S. economy is operating so far beneath its potential that inflation is unlikely to become a problem. Bernanke said high unemployment and idle factory capacity made it unlikely that inflation would post a rapid increase any time soon. Bernanke was selected as Time magazine’s Person of the Year for helping to guide the nation through the worst economic situation since the Great Depression of the 1930s.
On the Thursday economic calendar, watch for the Initial Jobless Claims report, Leading Indicators from the Conference Board and the Philadelphia Fed Index. On the earnings calendar, expect Actuant Corp, General Mills, Nike, Rite Aid, Research in Motion, FedEx, Pier 1 Imports, and Winnebago.
Happy Trading,
James Dicks
The AUD was down against the USD, after data showed Australia's economy grew in the third quarter at a slower pace and below market expectations, because of declines in private investment and net exports. Deputy Governor of the Reserve Bank of Australia reportedly said that Australian monetary policy has returned to a normal range, and that the current level of deposit rates, housing loan rates and business loan rates would have been consistent, before the crisis, with a cash rate of at least 4.75%. The rate is now at 3.75%.
The CAD gained against most of its major counterparts as crude oil, the nation’s biggest export, snapped its longest decline since 2001. The CAD’s appreciation versus the JPY was its biggest one-day gain against Japan’s currency on a closing basis since Dec. 4th, when a U.S. report showed job cuts fell to less than 1/10 of economists’ median estimate. The CAD was the third-best performer against the USD among the 16 most-traded currencies.
The GBP climbed against the EUR as data showed U.K. inflation accelerated to the fastest pace in six months in November, weakening the case for the Bank of England to keep its key interest rate at a record low. Sterling also strengthened against the yen. Consumer prices increased 1.9 percent in November from a year earlier.
And the Bank of Japan’s fixed rate three-month fund supplying operation attracted total bids of 6.8 trillion yen ($75.92 billion), more than eight times the amount offered. Total bids were 6.7863 trillion yen and bids accepted totaled 801.4 billion yen.
Federal Reserve Chairman Bernanke, in a response to a lawmaker's questions made public this week, said the U.S. economy is operating so far beneath its potential that inflation is unlikely to become a problem. Bernanke said high unemployment and idle factory capacity made it unlikely that inflation would post a rapid increase any time soon. Bernanke was selected as Time magazine’s Person of the Year for helping to guide the nation through the worst economic situation since the Great Depression of the 1930s.
On the Thursday economic calendar, watch for the Initial Jobless Claims report, Leading Indicators from the Conference Board and the Philadelphia Fed Index. On the earnings calendar, expect Actuant Corp, General Mills, Nike, Rite Aid, Research in Motion, FedEx, Pier 1 Imports, and Winnebago.
Happy Trading,
James Dicks
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