Market analysis

Monday, December 29, 2008

Euro pushing to new all-time, trade-weighted highs on geopolitics, possible end-of-year effects. Pound continues to struggle for support.

Another week of thin trading likely with the mid-week holiday. Short term moves may be poor predictor of the action coming in the New Year.

Market Comment by

On Friday, UsdJpy was 0.42% higher at 90.80. EurUsd was 0.18% lower at 1.4025 after trading as high as 1.4119. EurJpy rose 0.64% to 127.43. EurGbp also rose to a fresh high at 0.9618 or +1.18%. UsdChf was 0.35% lower at 1.0701. GbpUsd dropped 0.85% to 1.4618.

Last week, EurUsd rose 0.8% to 1.4025. EurJpy rose 2.5% to 127.43. UsdJpy was 1.62% higher at 90.80. UsdChf dropped 3.04% to 1.0701 and GbpUsd went 2.08% lower at 1.4618.

Government data on Friday showed Japan's industrial production dived a record 8.1% while annual core consumer inflation slowed sharply, to 1% in November, underscoring fears the world's second-largest economy could sink back into deflation next year. Bank of Japan policy board member Hidetoshi Kamezaki said on Thursday that the bank should consider ways to influence longer-term interest rates and corporate debt products if more easing steps are needed. The Bank of Japan 2 weeks ago lowered interest rates close to zero, mirroring steps by the US Federal Reserve, and moved to pump funds into the market to ease a corporate credit crunch.

My View on EURGBP

The EURGBP has just hit a fresh all-time high, reaching .9680. This pair is quickly approaching parity behind expectations that the EUROZONE will keep rates above UK rates along with a grim economic outlook for the UK. Time will tell if the weak GBP will continue into the New Year.


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