Worst Week for Sterling in Nine Months

Great Britain book published this week the biggest weekly fall against the U.S. dollar nine months of speculation that the fragile UK economy will force the central bank to keep interest rates at historic low.

Virtually all the key data this week was negative for the pound. Whether house prices, industrial production or the producer price index, all the signal indicators on the worsening state of the British economy. Not surprisingly, the Bank of England kept its policy very stimulating, but also reinforces the pessimistic view on the future of the UK economy and currency.

The pound was in decline against the dollar and the yen for almost a week and will publish the third consecutive weekly decline. The currency also weakened against the euro in the first half of the week, but strongly advanced in the second half as concern for the problems of the European Union intensified.


GBP/USD dropped from 1.6150 to 1.5878 over the week. GBP/JPY slipped from 124.20 to close at 123.20. EUR/GBP fell from 0.8765 to 0.8598, the lowest level since March, after it rose to 0.8842 earlier this week.

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US Dollar Suffers From Terrible Nonfarm Payrolls

The U.S. dollar fell against other currencies, including the British pound and Japanese yen today after the non-farm payrolls showed that job creation in the U.S. stagnated. The currency also fell against the euro, but recovered later.

U.S. non-farm payrolls showed no growth in employment in August. That is far worse than market expectations (growth of 74 000) and the worst reading since September 2010, when employment fell by 95,000. Average hourly earnings fell 0.1 percent, while markets had an increase of 0.2 percent. The poor economic report renewed speculation the Federal Reserve needs third round of purchases of assets, known as quantitative easing to boost the economic recovery in the United States.

The index of the dollar managed to rise 0.3 percent, to 74,683 today from 74,479 yesterday. The dollar pared losses against the pound and the yen and rebounded against the euro. The Standard & Poor's 500 fell to 2.3 percent.


GBP/USD climbed from 1.6177 to 1.6253 before trading at 1.6220 as of 19:40 GMT today. USD/JPY fell from 76.91 to 76.80 and touched low of 76.52 intraday. Meanwhile, EUR/USD tumbled from 1.4257 to 1.4199.

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US Manufacturing Expands, Dollar Profits

The U.S. dollar advanced today as the unexpected growth in the U.S. manufacturing spurred speculation the Federal Reserve will not need to stimulate the economy by debasing the U.S. currency.

The Institute for Purchasing Managers Index Supply Management "was at 56.6 in August, with little change in the July figure of 56.9. The index is expected to fall to 48.7. A reading below 50, 0 indicates deterioration and above this value indicates expansion. Positive data suggest that perhaps the U.S. economy is in a state not bad enough to justify a new round of quantitative easing.

Unemployment claims fell from 421,000 to 409,000 last week, reducing concerns about the use to some degree. Another important reason for the concerns of the Fed, the housing market, made worse because the construction cost has not increased by 0.2 percent, as promised by the forecasts, but fell by 1.3 percent.


EUR/USD opened at 1.4374 and dropped to 1.4226 before trading near 1.4259 as of 22:57 GMT today. GBP/USD fell from 1.6249 to 1.6183, while reached the intraday low of 1.6130 earlier. USD/JPY advanced from 76.64 to 76.86 and earlier touched the high of 77.24.

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USD Gains vs. EUR & CHF, Falls vs. JPY

The U.S. dollar managed to gain against the euro and Swiss franc today, but fell against the Japanese yen as traders left the bases mixed doubt about the prospects for the U.S. currency.

The Standard & Poors Case-Shiller index of home prices fell 4.5 percent in June from a year-over-year basis. That's a better result than the 4.7 percent decline forecast and falling 4.6 percent in May. On the other hand, consumer confidence Conference Board was far worse than forecast, from 59.2 in July to 44.5 in August, while analysts expect the index to be removed only to 52.1.

Reports of tomorrow are not good for the dollar is. The ADP employment report is expected to show slower growth of Americans employed by 102,000, compared with growth in July by 114,000. Economists say that the Chicago PMI showed a fall to 54.3 in August from 58.8 in July.


EUR/USD went down from 1.4510 to 1.4444 as of 21:05 GMT today, while intraday it touched the low of 1.4382. USD/JPY dropped from 76.84 to 76.73, while USD/CHF advanced from 0.8156 to 0.8201.

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CAD Gains vs. USD as Investors Seek Higher Yield

The Canadian dollar advanced against its US counterpart as market sentiment improved, creating investors a lot of willing to risk and appearance for higher-yielding currencies. The currency was down against the euro and the yen.


The Producer value Index within the US, the major trading partner of Canada, rose 0.2 p.c in July, following the drop by zero.4 p.c in June. Market analysts expected no change. Futures on crude oil (the key Canadian export) gained 1.9 p.c to $88.32 per barrel. the standard & Poor’s five hundred Index climbed 1 p.c.


The loonie (as Canada’s currency is usually nicknamed) was down two.4 p.c this month on the mounting sings of issues within the world economy. The necessary report about the inflation in Canada are going to be released on August nineteen. maybe even a lot of impact on the Canadian currency can have a testament by Bank of Canada Governor Mark Carney later that day.


USD/CAD fell from 0.9823 to 0.9809 as of 17:34 GMT today. EUR/CAD was a little higher at 1.4162 compared to the opening price of 1.4148, following the slump to 1.4083 earlier this day. CAD/JPY was down from 78.12 to 77.92.

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Fundamentals are Bad for US Dollar, But Week Wasn’t Bad

The fundamentals on were negative for the US dollar, weakening the currency against some major counterparts, however performance of the buck wasn’t that dangerous, considering all the pressure to the downside.

There were lots of dangerous new for the dollar on. dangerous housing knowledge, rising unemployment claims and slower that expected growth of the US economy. The week ended with the speech of Ben Bernanke, who hinted at possibility of extra stimulus while not detailing an actual arrange.

The dollar was dragged down by the unfavorable fundamentals and fell against the euro and commodity currencies (including the currencies of Canada, Australia and New Zealand). On the other hand, the dollar gained against the franc and rallied versus the yen before losing its gains by the top of the week as there aren’t many choices for investors who want a secure currency, however scared of interventions of Japan and Switzerland. The pound conjointly fell against the buck as Britain has its own problems that erase attractiveness of the nation’s currency.

Next week might also be onerous for the dollar. Analysts predict another unfavorable report about hosing and are pessimistic about employment knowledge.

EUR/USD climbed from 1.4376 to 1.4498, while during the week it dropped to 1.4327. USD/CHF climbed from 0.7904 to 0.8058 and reached the daily high of 0.8157. AUD/USD surged from 1.0380 to 1.0569.

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Dollar Drops After Bernanke Speech & GDP Report

The US greenback fell nowadays once the report showed that the US economy expanded with slower pace than was predicted by specialists and Federal Reserve Ben S. Bernanke hinted at risk of further stimulus.


According to the preliminary report, US gross domestic product grew one.0 % within the second quarter of 2011, following the rise by zero.4 % within the initial quarter. The advance estimate promised growth by one.3 percent, whereas market participants expected rise by one.1 percent.


Bernanke said nowadays at the Federal Reserve Bank of Kansas town Economic Symposium in Jackson Hole, Wyoming, that the Fed has suggests that to any stimulate the US economy, stating “the Federal Reserve features a vary of tools that might be used to produce further financial stimulus”. Chairman added that within the end of the day the economy will overcome its current difficulties:


Notwithstanding the severe difficulties we currently face, I do not expect the long-run growth potential of the U.S. economy to be materially affected by the crisis and the recession if — and I stress if — our country takes the necessary steps to secure that outcome.


The speech was well received by markets and stocks advanced, pushing the quality & Poor’s five hundred Index up zero.7 % once it earlier fell two %.


EUR/USD climbed from one.4377 to 1.4476 as of 17:00 GMT nowadays, following the drop to one.4328. GBP/USD rose from one.6278 to 1.6341 once it dropped to one.6206 earlier. Meanwhile, USD/JPY tumbled from seventy seven.44 to 76.67.

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Foreign Exchange Insight: GBP USD Poised ahead of Jackson Hole Symposium EUR Gains on Hope For Stability

The Pound Euro exchange rate (GBP EUR) is 1.1305. The Pound Dollar exchange rate (GBP USD) is 1.6324. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5550.

The pound sold off yesterday against most of the world's most actively traded currencies with CBI figures showing a slowing in demand in the UK economy. This has not helped in setting the tone into trade this morning with the headline Q2 GDP revised figures due for release today.

The UK Q2 GDP figures are not expected to be altered and will serve as a harsh reminder that the outlook for the UK economy is still bleak with any chance of the BOE raising interest rates being highly unlikely until the latter part of 2012.

The Jackson Hole Economic Symposium will take centre stage today as markets attempt to second guess whether Bernanke will hint at a requirement for further stimulus for the US economy. A third round of Quantitative Easing could help speed up the US economic recovery however is looking increasingly unlikely with markets buying into the USD aggressively yesterday.

It is somewhat unlikely that Bernanke will use the QE3 terminology at the Jackson Hole Economic Symposium, this would adversely affect the markets, more likely is that Bernanke may comment on aid packages to improve the functioning of struggling asset classes, fortifying liquidity and boost growth.

Markets will pay close attention to comments made from both key speakers Bernanke and Jean Claude Trichet. Traders will be looking for reassurance over financial stability in markets that have been dominated by uncertainty in the past couple of weeks. It is clear that conditions are worsening in the Eurozone and with ECB president Trichet attending some might hope for talks of a co-ordinated effort to try and resolve the current global instability. 


From : Currencynews.co.uk

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USD To Face Sideways Price Action Ahead Of Major Event Risks

DJ FXCM Dollar Index

Index	Last	High	Low	Daily Change (%)	Daily Range (% of ATR)
DJ-FXCM Dollar Index	9438.12	9519.83	9424.94	-0.92	98.30%

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) is 0.92% lower from the open after moving 98% of its average true range, and the reserve currency may continue to give back the advance from earlier this week as investors raise their appetite for risk. As the relative strength index pushes into oversold territory, the sharp decline may gather pace throughout the remainder of the day, and the index could fall back towards near-term support around 9405 as it gives back the advance from earlier this week. However, the USD may consolidate in the days ahead as we have the Federal Open Market Committee meeting minutes paired with the U.S. Non-Farm Payrolls report on tap for the following week, and the slew of event risks could heavily influence the greenback as market participants weigh the outlook for future growth.

Indeed, Fed Chairman Ben Bernanke talked down speculation for another round of quantitative easing, stating that central bank is not promoting new steps to stimulate the ailing economy, and the committee looks as though it will preserve a wait-and-see approach throughout the remainder of the year as policy maker expect the recovery to gather pace over the coming months. As Mr. Bernanke encourages Congress to support the real economy, the government may face increased pressures to employ additional fiscal stimulus, but the Fed may keep the door open to expand monetary policy further as the FOMC is expected to hold a ‘fuller discussion’ of tools as the rate decision next month. In turn, the USD may continue to consolidate in the week ahead, and the greenback may trade within a broad range until we get an clearer picture on what the central bank intends to do over the medium-term.

All four components advanced against the greenback, let by a 1.37% advance in the Australian dollar, and the high-yielding currency may continue to appreciate over the near-term as the central bank talks down expectations for lower borrowing costs. As Reserve Bank of Australia Governor Glenn Stevens continues to endorse the ‘mildly restrictive’ policy, it seems as though we will see the benchmark interest rate staying at 4.75% for the remainder of the year, and the central bank head may retain a neutral tone heading into 2012 as board members see a limited risk for inflation. In turn, the near-term rebound in the AUD/USD could gather pace in the days ahead, and the exchange rate may continue to retrace the sharp decline from earlier this month as the RBA remains fairly optimistic towards the economy. Nevertheless, market participants still see borrowing costs falling by more than 125bp over the next 12-months according to Credit Suisse overnight index swaps, and speculation for lower interest rates may continue to drag on the exchange rate as the economic docket shows a slowing recovery in the isle-nation.

From : Dailyfx.com

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