Showing posts with label US Dollar. Show all posts
Showing posts with label US Dollar. Show all posts

U.S. Dollar Gives Back, Euro Struggles to Hold Ground

Posted by Prasanth on Monday, May 9, 2011 , under , | comments (0)



The U.S. dollar lost ground during the overnight trade as currency traders increased their appetite for yields, and the rebound in risk sentiment is likely to drive price action throughout the North American as the economic docket remains fairly light for Monday. However, the EUR/USD pared the overnight rally to 1.4441 and the single-currency may face additional headwinds over the near-term as European policy struggle to address the risk for contagion.
 
During the unscheduled meeting on May 6, the EU pledged to review the lending terms of the EUR 110B bailout for Greece in order to avoid the region’s first sovereign debt restructuring, but the record-high financing costs faced by the European periphery will continue to bear down on market sentiment as investors fear the a breakup of the monetary union. In turn, the small correction in the single-currency could be short-lived, and the EUR/USD may continue to push lower over the near-term as it breaks out of the upward trend from earlier this year. As the euro-dollar struggles to hold above the 78.6% Fibonacci retracement from the 2009 high to the 2010 low around 1.4430-50, the overnight rally may taper off going into the North American trade, but speculation for higher borrowing costs may help to prop out the single-currency as the European Central Bank sticks to its one and only mandate to ensure price stability. Despite the ongoing turmoil within Europe’s financial system, market participants still see the ECB raising the benchmark interest rate by 75bp over the next 12-months according to Credit Suisse overnight index swaps, and the EUR/USD may face range-bound price action in the coming days as investors weigh the prospects for future policy.
 
The British Pound struggled to hold its ground as home prices in the U.K. marked the biggest decline in seven-months, and the GBP/USD may threaten the upward trend from earlier this year as we are likely to see the Bank of England maintain a dovish outlook in its quarterly inflation report, which is due out on May 11. As growth and inflation cools, BoE Governor Mervyn King should retain a neutral tone for future policy, and the central bank head may talk down speculation for higher borrowing in the U.K. as he aims to encourage a sustainable recovery. As the GBP/USD approaches the 50-Day SMA at 1.6286, we may see the near-term reversal in the exchange rate gather pace later this week, and the sterling may face additional selling pressures over the near-term as the DailyFX Speculative Sentiment Index now highlights a bearish outlook for the pair. The contrarian indicator suggests we will see additional declines in the exchange rate as retail traders are now net long against the GBP/USD, and comment from the BoE will certainly dictate future price action for the pair as investors weigh the outlook for monetary policy.
 
As equity futures foreshadow a higher open for the U.S. market, the rebound in risk appetite should carry into the North American trade, and the U.S. dollar may lose ground throughout the day as investors move into higher-yielding currencies. However, as Standard and Poor’s lowers Greece’s sovereign credit rating to B from BB- and warns of additional cuts on the horizon, heightening fears surrounding the European debt crisis could spur a shift in risk sentiment as investor confidence remains battered.

Rupee down ; Dollar gains

Posted by Prasanth on Friday, May 6, 2011 , under , | comments (0)



The rupee was down in early morning trades on Friday tracking weak regional peers and dollar gains overseas.
* At 9:24 a.m., the partially convertible rupee was at 44.8250/8400 per dollar, after touching 44.90, a level last seen on March 28. It had closed at 44.76/77 per dollar on Thursday.

* The index of the dollar against six major currencies was down 0.15 percent at 74.079 points, but higher than 73.090 at the close of local foreign exchange market on Thursday.
* The dollar held on to chunky overnight gains on Friday and key resistance levels were in its grasp as tumbling oil prices, a dearth of indications there would be an immediate rate hike from the European Central Bank and a series of soft U.S. data prompted selling of higher-yielding currencies. 

Dollar Needs another Push from Risk Aversion, GDP or Rates

Posted by Prasanth on Thursday, January 28, 2010 , under , | comments (0)



US Dollar May Decline as Stock Index Futures Point to Recovering Risk Appetite

Posted by Prasanth on , under , , | comments (0)



The US Dollar may decline in European trade as US equity index futures trade 0.6% higher ahead of the opening bell, pointing to a rebound in risk appetite that could weigh on the safety-linked greenback.

Key Overnight Developments

• New Zealand Dollar Little Changed After RBNZ Rate Decision
• Japanese Retail Sales Disappoint as Consumer Confidence Flounders


Critical Levels

euro open 01282010 1

The Euro is little changed heading into the European session after prices retraced nearly all of the drop below 1.40 seen in early overnight trade. The British Pound has also yielded an effectively flat result, reversing lower late into Asian trading after testing as high as 1.6229 against the greenback. We remain short EURUSD at 1.4881.


Asia Session Highlights

euro open 01282010 2

The Reserve Bank of New Zealand kept benchmark interest rates unchanged at 2.5% as expected. RBNZ Governor Alan Bollard said annual inflation is expected to track comfortably within the target band over the medium term, reiterating that the bank expects to begin removing policy stimulus around the middle of 2010. The reaction from the currency markets was understandably muted considering the outcome offered no significant changes in policy expectations.

Japan’s Retail Trade report showed sales fell much more than economists expected in December, slipping -1.2% versus calls for a -0.2% decline. In annual terms, sales fell -0.3%, disappointing expectations forecasting the first increase 15 months. The outcome follows a report last week that showed consumer confidence fell for the second consecutive month in December amid expectations of deepening unemployment.

Dollar Surges as Speculative Sentiments Sours, Rates Slowly Rise

Posted by Prasanth on Thursday, January 21, 2010 , under | comments (0)



Are the US and global economies developing a speculative bubble? Just a year ago, investors and policy makers were still reeling from the fallout of the worst financial crisis in modern history. Today, though growth projections are reserved and yield expectations are far below the levels seen through the boom years, the Dow is 60 percent above its 2009 lows. This is a side effect of the world’s governments laying down a safety net for speculators in the form of policy and encouraging risk taking through unprecedented injections of stimulus. Interest rates near recent-record lows have opened the doors to financing and leverage; and market participants are happy to recover some of the wealth lost through the preceding crisis. However, a factor that has been ignored for too long through the bullish rally is that this market cultivation is temporary. Eventually, the government has to withdrawal its support and the market will have to stand on its own weight. Considering the sharp rally in the dollar and drop in risk-sensitive markets today, this eventuality can no longer be ignored. And, while this particular spike in volatility doesn’t necessarily mark the turning point for speculation; it nonetheless speaks to the doubts that lie just beneath the surface. Should a move to fairly value capital markets develop, the dollar will be a primary benefactor as a primary source of funding behind the carry trade build up. Furthermore, when the US and Japanese 3-month Libor rate finally flip in the dollar’s favor, the greenback won’t have to depend on risk alone.

US Dollar Forecast to Lose Against British Pound,

Posted by Prasanth on Thursday, January 14, 2010 , under , | comments (0)



SSI114table

Recently-choppy US Dollar price action has made for similarly directionless shifts in forex sentiment, and we believe that the US Dollar is likely to continue range-trading against the Euro. Strong rallies in the British Pound, on the other hand, seem likely to continue given strongly one-sided crowd positioning and give us reason to believe that the GBP will continue to gain against the USD and Japanese Yen. We see similarly extreme crowd sentiment in the Canadian Dollar and accordingly call for further CAD strength against its US namesake (USDCAD losses), while forecasts likewise point to further Swiss Franc rallies against the Euro and US Dollar. Watch our twice-a-day updates on DailyFX+ for more up-to-date SSI positioning data.