The Forex Daily Digest – January 21, 2010
The USD reached a five-month high against the EUR and gained on other currencies amid continuing sovereign-debt worries in the euro zone and additional signs that the region's recovery seems to be losing momentum. Gold rallied, setting the pace of gains in other precious metals including platinum, after its biggest drop in a month lured buyers and the dollar’s rally paused. Palladium reached a 19-month high.
One analyst said that the USD is currently up sharply on risk aversion due to concerns about Chinese policy tightening and continued aversion from exposure to Greece and Europe. Greek Finance Minister George Papaconstantinou has denied a report that European Union officials were exploring the prospect of a loan in an effort to avert Greece turning to the International Monetary Fund. The finance minister said Greece would not need outside help and would manage to meet its borrowing needs on its own.
Japan’s government reportedly supports sending a "collective message" to China at the G7 meeting next month to allow more flexibility in the yuan. China is under heavy pressure from the Group of Seven leading industrialized nations to revalue its currency, which some economists say is maintained artificially low, giving it an unfair export advantage and encumbering more balanced economic growth.
Canadian Finance Minister Jim Flaherty will chair the G7 meeting of finance ministers and central bank governors in Canada's Far North, Feb. 5-6. He has agreed to Japan's request to discuss the Chinese issue at the meeting but did not say whether he backed issuing a joint message.
Citing technical patterns, the Royal Bank of Canada believes the CAD will likely end a month-long rally against the USD if it closes weaker than C$1.0473 to the dollar. The CAD was little changed against the dollar, with traders looking to a Bank of Canada report that is expected to reaffirm expectations that rates will stay on hold until at least the middle of this year.
President Obama said in a televised interview that he knew there was frustration about the bank bailouts but he is optimistic about the prospects for the U.S. economy this year. The president, faced with 10 percent unemployment has hit his popularity and injured his Democratic party agenda in Tuesday's Senate election in Massachusetts, says he has placed jobs and economic growth at the top of his agenda for 2010.
A top Federal Reserve policymaker said that Wall Street is moving in the right direction on reforming banker compensation, but it's important that similar reforms are adopted overseas as well. New York Federal Reserve President William Dudley said he understood why Americans were angry at large compensation plans for bankers at firms that received federal bailout money. But he said the Fed had to act quickly during the worst of the financial crisis to prevent a systemic collapse and added that Wall Street was making progress toward tying future compensation to performance.
There are no major U.S. economic reports on the Friday calendar. But you can expect UK Retail Sales, European Industrial New Orders, and Canadian Retail Sales on Friday morning. Scheduled major U.S. earnings include General Electric, Harley- Davidson, BB&T Corp, Johnson Controls, Kimberly Clark, McDonalds, SunTrust Banks, Schlumberger and Webster Financial.
Happy trading,
James Dicks
One analyst said that the USD is currently up sharply on risk aversion due to concerns about Chinese policy tightening and continued aversion from exposure to Greece and Europe. Greek Finance Minister George Papaconstantinou has denied a report that European Union officials were exploring the prospect of a loan in an effort to avert Greece turning to the International Monetary Fund. The finance minister said Greece would not need outside help and would manage to meet its borrowing needs on its own.
Japan’s government reportedly supports sending a "collective message" to China at the G7 meeting next month to allow more flexibility in the yuan. China is under heavy pressure from the Group of Seven leading industrialized nations to revalue its currency, which some economists say is maintained artificially low, giving it an unfair export advantage and encumbering more balanced economic growth.
Canadian Finance Minister Jim Flaherty will chair the G7 meeting of finance ministers and central bank governors in Canada's Far North, Feb. 5-6. He has agreed to Japan's request to discuss the Chinese issue at the meeting but did not say whether he backed issuing a joint message.
Citing technical patterns, the Royal Bank of Canada believes the CAD will likely end a month-long rally against the USD if it closes weaker than C$1.0473 to the dollar. The CAD was little changed against the dollar, with traders looking to a Bank of Canada report that is expected to reaffirm expectations that rates will stay on hold until at least the middle of this year.
President Obama said in a televised interview that he knew there was frustration about the bank bailouts but he is optimistic about the prospects for the U.S. economy this year. The president, faced with 10 percent unemployment has hit his popularity and injured his Democratic party agenda in Tuesday's Senate election in Massachusetts, says he has placed jobs and economic growth at the top of his agenda for 2010.
A top Federal Reserve policymaker said that Wall Street is moving in the right direction on reforming banker compensation, but it's important that similar reforms are adopted overseas as well. New York Federal Reserve President William Dudley said he understood why Americans were angry at large compensation plans for bankers at firms that received federal bailout money. But he said the Fed had to act quickly during the worst of the financial crisis to prevent a systemic collapse and added that Wall Street was making progress toward tying future compensation to performance.
There are no major U.S. economic reports on the Friday calendar. But you can expect UK Retail Sales, European Industrial New Orders, and Canadian Retail Sales on Friday morning. Scheduled major U.S. earnings include General Electric, Harley- Davidson, BB&T Corp, Johnson Controls, Kimberly Clark, McDonalds, SunTrust Banks, Schlumberger and Webster Financial.
Happy trading,
James Dicks
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