Geithner: "Proposal for Chinas world currency" | Pounds Stumbles | Chart Analysis EUR/JPY

Friday, March 27, 2009


Treasury Secretary Timothy Geithner said on Wednesday that the US Dollar was likely to be the worlds reserve currency for a long time to come. And with this, he also said he was open to Chinas world currency proposal. The dollar reacted negatively as Geithner spoke, especially against the Euro which it had been up against until Geithner spoke. As investors began to digest the bank plan the US Treasury announced on Monday, many began to question the viability of the plan which increases US spending and taxpayer liability, and calls on private investors to join in the purchase of these assets with unknown value.

At 5PM GMT, the Dollar was trading down to the Euro .5% to 1.3534 after trading up to 134.95 when Geithner began to speak. The Dollar also fell to the Yen by ½ to 97.57 and to the Canadian Dollar by ½% to 1.2248. The dollar did manage a gain against the Pound to 1.4592, a .6% rise.


The pound fell after the Confederation of British Industries distributive trades survey balance fell to -44 in March from -25 in February. Analysts had expected a smaller deterioration to -35. The failure to achieve a fully covered Gilt auction, suggesting reduced demand for sterling assets, also weighed on the currency.

Gilt strategists blamed the auction's failure on market uncertainty created by Bank of England Governor Mervyn King when he said on Tuesday that the Bank of England could scale back its program of gilt purchases if they were especially successful in boosting the economy.

At 5:15 GMT, the Sterling was down 1.1% to the Euro to .9272, down about 1% to the Yen to 142.42, down 1 ½% to the Swiss Franc to 1.6394 and down 1 ¼ % to the Canadian Dollar to 1.7858.

Online Forex Chart Analysis: EUR/JPY

The persistent EUR/JPY rally of late finally met resistance late yesterday as equities eased off recent highs. We wonder if the JPY crosses will top out here towards the end of March as Japan gets set for a new financial year. Watch the 200-day moving average in this cross as an important technical level over the coming week.


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