Safe-Haven Flows Return With Dubai Debacle

The Japanese Yen was widely mixed on Friday as safe haven flows came in after the Dubai news in Forex world, but traders’ exercised caution after The Bank of Japan stepped closer to currency intervention by checking exchange rates with commercial banks.

It was the first time in five years that the Japanese Central Bank made this kind of a move and it came in tandem with Finance Minister Hirohisa Fujii expressed outward concern about the increased valuation of its currency.

The Yen is pegged to the thriving exports that come from Japanese soil; a strong Yen discourages international buyers as it translates into fewer products for more money.

At the close, the Yen was up ¾ percent against the US Dollar to 86.5, down .1% against the Swiss Franc to 86.07, up .12% versus the British Pound to 142.57, down .2% to the Canadian Dollar to 81.473 and down .22% to the Australian Dollar to 78.54. The Yen was up 1.2% against the Euro to close the week at 129.69.

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Risk Appetite Returns after Positive US Data

The US Dollar continued its fall on Wednesday, after a spate of data releases increased optimism in the US for an economic recovery. Three key pieces of data were released in the last Forex trading session before the Thanksgiving holiday on Thursday and all three were better than expected.

On the jobs front the US shed less jobs in this reading than it has for over a year, this while retail sales jumps higher than anticipated and home prices increase for the fifth straight month.

Minutes were also released fro the Federal Reserves meeting in which it was revealed that the Fed as a whole saw the falling Dollar as an orderly occurrence.

All of these combined brought risk appetite back into the markets and pushed the Dollar to a sixteen month low on the ICE futures Dollar index, a non traded index which matches the performance of the Greenback to 6 major currencies.

At 10:25PM GMT, the US Dollar was trading down .91% to the Euro to 1.5088, down 1.21% against the Japanese Yen to 87.48, down .55% versus the British Pound to 1.6674, down .84% against the Canadian Dollar to 1.0489, down 1.15% to the Australian Dollar to .9293 and down .86% versus the Swiss Franc to .9998.

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Chart Analysis: USD/JPY

A lot of focus is on the USD/JPY this week after today. If the pair closes the week at current levels or lower, it would be the lowest weekly close since 1995. These low levels are coinciding with the US 10-year benchmark skating along the key support at the 200-day moving average. A continued sell-off in the USD/JPY could be precipitated if yields continue to drop from here.

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Worry over the Dollar’s credit rating

Forex Investors continued to downsize their risk holdings as stocks and commodities slid again while the Dollar reaped the benefits for a second straight session. Many see this as an overdue bounce for the Dollar which has been down close to 15% since the first quarter of 2009.

As worry over the Dollar’s credit rating as well as rising deficits and national debt in the US sparked a flight from the Dollar, other investments such as oil and Gold, which recently hit an all time high.

As the year winds down analysts expect profit taking from the 9 month boom of alternative investments to continue. This would spell good news for the Greenback.

At the close the Dollar was up 1.1% to the Euro to 1.4859, up 1.22% versus the British Pound, up .33% to the Canadian Dollar to 1.0704, up .14% against the Australian Dollar to .9144 and up .19% to the Swiss Franc to 1.0175.

The Dollar did fall 1.14% against the Japanese Yen signalling that the interest in the Dollar’s resurgence is not as stable as people would like right now.

The ICE Futures US Dollar index, a non-traded indicator which measures the USD’s performance against six major currencies, was up on the day at above 75, well above a 15-month low of 74.679 which it fell to earlier in the week.

The jump was due however to what traders call a “faulty trade” which saw a double in average daily volume after the contract sold off at 76.50, a number never reached. This sparked a wave of limit orders which were cancelled upon clearing after the session.

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Chart Analysis: EUR/JPY

The 200-day moving average was the big focus of the day due to the number of times this level has served as a key pivot point in the past. If risk continues to adjust lower here and bond yields remain low or even drop further, we could see a move below the Moving Average and even a try at the lower end of the longer term range.

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Dollar Moves after Ben Bernanke’s comments!

The US Dollar continued its rebound started Monday on the heels of Federal Reserve Chairman Ben Bernanke’s comments. The Dollar also was helped by a profit taking selloff in stocks, oil and gold – all which have been steaming forward as of late. Coupled with all of the above, the European Central Bank President, Jean Claude Trichet commented that the Euro is not a substitute for the Dollar as a reserve currency and that the Dollar’s function as the primary reserve is essential. This gave investors and additional sense of calm amidst the Dollar’s recent weakness and worries about the prospect of it losing steam as the major reserve currency for the world’s major countries.

At 10:00PM GMT in the forex online market, the US Dollar was up.7% to the Euro to 1.4866, up .27% to the Japanese Yen to 89.28, up .11% to the British Pound to 1.6798, up .97% against the commodity reliant Canadian Dollar to 1.0576 and .9% versus the Aussie to .9267. The Dollar also rose .76% to the Swiss Franc to 1.0154 and .49% against the New Zealand Dollar to .7453.

Low interest rates and the prospect that they will not be going higher anytime soon is still weighing the Dollar down. Speculation by analysts suggests that it could be the middle of 2010 before the US in a position to raise their interest rates, a scenario that spells a long and painful winter for Dollar traders.

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Bernanke saves the day, but dollar still falls - just not as hard

The dollar fell across the board on Monday although it recovered some after the US Federal Reserve Chairman, Ben Bernanke, commented that the Fed was keeping its eye on the fluctuation in the Dollar soothing those that fear the out-of-control spiralling that the Dollar has been in for the past three months. The Fed chairman went beyond what is typical of a central bank head and spent a good portion of his speech to a private New York organization talking about the Dollar, a move that was seen as reassuring that the US will be quick to act before anything major happened to the Dollar.

At 11:38PM GMT, the US Dollar was trading down .48% to the Euro to 1.4974, down .6% to the Japanese Yen to 89.1, down .91% to the British Pound to 1.6828, down .4% to the Canadian Dollar to 1.0475, down .47% to the Aussie to .9372 and down .51% to the Swiss Franc to 1.0072.

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Dollar falls after poor Consumer and Trade Data

A spate of negative data on consumer confidence and trade gaps took the thunder out of a two day Dollar rally on Friday and brought the bears back to the US currency in a broad day of losses. A Reuter’s survey of consumers showed that the consumer confidence index dropped to a three month low of 66, a 5 percent from analyst expectations of 71. The November number is also a 4.6 percent drop from the October data. The data is especially hard to swallow now, during the start of the peak holiday spending season and bodes poorly for retail sales in the coming months.

At the same time, data from the September trade deficit showed the trade gap widened by 18.2 percent, the largest margin in over 10 years. The US Department of Commerce announced that the monthly trade gap ballooned to 36.5 Billion Dollars, up from a 30.8 Billion Dollar showing in August, analysts were expecting a small increase, to 31.6 Billion. The data showed that part of the issue is that the fall of the Dollar’s value is being offset by strong demand for US products while the costs have gone up on core commodities such as oil.

The average price for imports rose by .7 percent a .5 percent gain from the last report of a .2 percent increase in September, a number that analysts say is rising too fast and may spell trouble for the trade gap should this trend continue.

At the close, the US Dollar was down .38% against the Euro to 1.4901, down .8% versus the Japanese Yen to 89.63, down .59% to the British Pound Sterling to 1.6676, down .38% against the Canadian Dollar to 1.0514, down 1.02% to the Australian Dollar to .9328, down 1.43% versus the New Zealand Dollar to .7433 and down .47% to the Swiss Franc to 1.0124.

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BOE Governor's words tank the Pound

The British Pound Sterling fell across the board on Wednesday, after the Bank of England’s Governor, Mervyn King, said a slide of the Pound could help UK exporters and aid Britain's recovery from recession.

The remarks came after the UK released data on inflation which came in below the target, a better than expected showing.

Forex Online Investors are nervous however, even with the good inflation news, that after the elections early next year, the new government will implement a policy of fiscal tightening, which will likely cut the asset-buying program, a program that is widely hailed as a success.

At 10:15PM GMT, the British Pound was trading down 1.2% versus the US Dollar to .9288, down 1.02% to the Euro to .9042, down 1.15% to the Japanese Yen to 148.6, down 1.1% against the Swiss Franc to 1.6691 and down 1.06% versus the Australian Dollar to 1.7802.

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Some Action Seen in USD while EURJPY showed some slow moves

The US Dollar rose from the lows set on Monday, after Forex investors sought to lock in profits from the steep fall. Analysts speculated that the mood on the street was that the Dollar fell too far, too fast and that was the cause for the pull back on Tuesday.

The trend on the USD is still lower, although and investors can be sure to see more down days in the future. The ICE Dollar index rose to just over 75 after falling to a fifteen month low on Monday.

At 10:20PM GMT, the US Dollar was trading up .2% to the Euro to 1.4968, up .1% against the Australian Dollar to .9286, up .2% to the New Zealand Dollar to .7415, up .14% versus the Swiss Franc to 1.0087 and down .2% against the Japanese Yen to 89.75.

Chart Analysis: EURJPY

A new four-day high was rejected today and interest rates have ticked sharply lower, suggesting there could be more downside pressure for the shortest term on JPY crosses.

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Chart Analysis: EUR/GBP

EURGBP trying to make a new foray to the downside today, but will likely need a good look at Wednesday's Quarterly Inflation Report before any decisive move can be made. Note the approaching 200-day moving average to the downside.

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Unemployment rate shocker boosts Dollar

The US unemployment situation worsened to levels unseen since 1983 prompting many Forex traders and investors to seek safe-haven shelter in the Dollar. The number of unemployed Americans rose to 10.2%, a .3% increase from expectations and amplified concern that while the economy is showing growth, the employment situation is dire.

Government estimates assumed the rate would not reach 10% until 2010 and the stimulus package signed in March was supposed to curtail the level to no more than 8.9%.

Meanwhile, the US House of Representatives passed a 1.3 Trillion Dollar health care package, bringing US sponsored health care to all Americans.

The contentious legislation is seen as adding to an already irresponsible debt load, making the boom of the past decade seem that much farther to attain.

At the close, the US Dollar was up 1.1% to the Euro to 1.4845, up .11% to the Yen to 89.95, up .24% against the Canadian Dollar to 1.0726, down .18% to the Sterling to 1.6611, up .27% versus the Swiss Franc to 1.0144 and down .45% against the Australian Dollar to .9229.

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Chart Analysis: USD/CAD

The USD/CAD looks interesting over the next couple of days. We have so far seen a basic retracement, with yesterday's close very near the 0.382 Fibonacci of the latest rally to 1.0870. Today's Ivey PMI and tomorrow's combination of both the Canadian and US employment data for October are likely to tell us whether the lows are in for now, or whether we could see a test toward the lower 0.618 Fibonacci in the 1.0460 area in the event of a further rally in risk appetite and a weaker USD. The sequence that put USDCAD back above 1.0590 after a try down to 1.0200 suggests that we should be looking for confirmation soon that a structural low (1.0200) is in place.

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Rising Stocks and Gold Sink Dollar on Wednesday!

The US Dollar dropped on Wednesday against most majors, after a sharp rise in equities and commodities stole the Dollar's safe-haven appeal. The downturn happened as Forex investors waited for a policy decision from the US Federal Reserve Bank.

The Fed left rates unchanged as promised, helping fuel the flow into riskier investments. On the day, the ICE futures, which measures the Dollar against a basket of 6 major currencies was down to 75, down from the month high of 76.8172.

At 12:00AM GMT, the US Dollar was down .98% to the Euro to 1.4866, down 86% to the British Pound to 1.6569, down .23% to the Canadian Dollar to 1.0628, up .86% to the Australian Dollar to .9101 and down 1% to the Swiss Franc to 1.0154. The Dollar did rise .42% against the Japanese Yen to 90.67.

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Chart Analysis: GBP/USD

The GBP/USD was down testing close to the two-week low of 1.6250 Tuesday. This area also coincides with the 21- and 55-day moving averages and serves as the trigger for a larger downside view if a break holds.

It is always interesting when the Forex Online market is trading close to key levels ahead of big events, like FOMC later on today and Bank of England meeting on Thursday (just to name the two biggies) If support survives for now, the focus reverts to perhaps 1.6500 as an upside swing level and then the 1.6700 area.

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Dollar quickly returns to losing ways

The Dollar rally at the end of last week ended Monday, as the Dollar fell broadly. The decline confirmed thoughts that the rally on Friday had more to do with end of month short coverings, than optimism over the USD’s viability in the Forex market.

The Dollar was not helped by more manufacturing and housing data from the US that continued to show a resurgence of strength, prompting investors to go for assets with more risk and higher yields.

At 12:00 AM GMT, the Dollar was trading down .24% to the Euro to 1.482, down .09% to the Japanese Yen to 90.26, down .32% to the Canadian Dollar to 1.0775, down .18% to the Australian Dollar to .9034 and down .04% to the New Zealand Dollar to .7177.

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