EURO & CAD Forex online updates and Chart Analysis EUR/JPY

Wednesday, April 22, 2009


A surprising data release out of Germany was the spark for a Euro rally against the Yen and Dollar on Tuesday although continued worries over next months European Central Bank tempered the Euro's run against the other majors. The German ZEW poll of German Economic Sentiment, which measures investor confidence showed a very surprising increase. The report came in at +13 after falling to -3 in March. It was expected that the report would show a fifth straight month of decline and put the index closer to -10. At this time the Eurozone will take whatever good news they can get, and today's was good enough to push the Euro off of a month low versus the Dollar.

Year to date the Euro is down more than 7 percent to the US Dollar and the prevailing thought is that this trend will continue until the ECB implements a more aggressive monetary policy - a route they have until now been unwilling to take. For now, investors are weary of what "unconventional" plan the Central bank will announce on May 7th, speculating that it will still be too soft and ineffective. For now it is a wait and see market for the Euro - take whatever good news in stride and wait for the big news next month.

At 10:15PM GMT, the Euro was trading up .4% to the USD to 1.2944m up 1.1% to the Yen to 127.88, down .75% to the Sterling to .8823, down 2% to the Australian Dollar to 1.8182 and up .35% to the Swiss Franc to 1.5112.


The Canadian Dollar went back and forth Tuesday after the Bank of Canada lowered interest rates to an all time low of .25%. This was met with a rush of selling until the Bank President announced that on Thursday the BOC will announce their stimulus plan which is said to include the purchase of corporate securities and government debt with newly created money. This unorthodox and aggressive approach by a generally conservative and tempered Central Bank was greeted with enthusiasm in the Forex market and helped the Canadian Dollar rebound.

The monetary policies that Canada is thought to be proposing is a sign of the times. Historically, a Central Bank buying its own governments debt is a risky proposal as it can lead to inflation, hyperinflation or worse, stagflation. However after the US and England have tempted fate on historical levels (the US has committed close to 20% of GDP to this method), many other countries are following suit. In cutting interest rates Tuesday, Sweden's Riksbank also announced that they too are prepared to resort to "other measures" should their economy continue to decline.

At 10:45PM GMT, the CAD was trading up .3% to the Euro to 1.5998, up .4% tot he US Dollar to 1.2362, up .2% to the Australian Dollar to .8786 and down .5% to the Sterling to 1.8131.

Gaining a Perspective Part 2- Chart: EUR/JPY 1-Year

As we saw with the EUR/JPY chart yesterday, the bottom has seemed to fall out of the Euro. With all of Japan's problems, from disastrous export numbers to severe unemployment to it's fall from grace as a safe-haven currency, it still has managed a near 50 YEN gain against the Euro. A comparison of the EUR/JPY from yesterday will even show similar patterns - eerily similar so again I ask the question, is the Euro's fall a result of bad policy on the part of the ECB? Tomorrow we will try and answer this nagging question.


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