Interest Rate Hopes Impede Dollar Fall

Wednesday, January 6, 2010

USD

The US Dollar recouped some of its losses from the previous session in Tuesday trading and was mixed overall.


Forex Traders were talking about the ADP jobs report which comes out on later on today and is estimated to show that more jobs were created than lost in December, the first time in two years that this would have occurred.

Should the data prove to be accurate, it could lead to a February interest rate hike at the next Federal Open Market Committee meeting.

Dollar supporters agree that this year could be particularly difficult for the Greenback. With looming debt crisis, a fledgling real estate market that is increasing foreclosures even with the stimulus funds and a 10% unemployment rate that will likely remain high through at least the third quarter.

It is for this reason that any glimmer of hope for an interest rate hike garners positive attention. The ADP jobs report will be followed by Friday’s non-farm payroll, the official government number and traders are hoping both numbers fall in line with expectations – however in recent months the ADP was not always a great indicator of the NFP.

At 11:00 PM GMT, the US Dollar was trading up .3% to the Euro to 1.4365, down .92% versus the Japanese Yen to 91.65, up .58% to the British Pound Sterling to 1.5993, down .26% against the Canadian Dollar to 1.0388 and down .16% to the Australian Dollar to .9117. The Dollar also made marginal gains against the Swiss Franc, rising .09% to 1.0331.


Analysis: EUR/USD

Despite everything that is happening in the US, the Euro is signaling that it is in a corrective phase now against the US Dollar. After a stellar 2009 for the Euro, largely a result of the declining Dollar, the trend seems to have ended in December.

Technically, the pair could test the horizontal support line of 136 and hover in that vicinity forming a higher bottom. Traders are lining up orders around 147 in the pair, a mark which is the 50 day moving average.





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1 comments:

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