USD Softer, Awaits Data

The currency market has much to digest this week as traders look ahead to monetary policy decisions from several central banks, including the BoC, RBA, BoE and ECB. The greenback relinquished some of last week’s gains in early Monday trading, slipping against the sterling and yen. The major currency pairs will likely be dictated by a combination of sentiment over global interest rate differentials as well as any new revelations from the subprime debacle and credit crisis.
read more:USD Softer, Awaits Data



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Robust ADP Boosted Dollar, Eyes on BOE ECB

The dollar extended gains following a surprisingly strong ADP employment report, reducing concern that subprime crunch will impede economic growth. The euro tested the support at 1.46 versus the dollar, and the sterling fell sharply from 2.06 to 2.0250 against the dollar. The yen weakened to near 111 versus the dollar.

As shown in ADP report, 189k jobs were added in private sector in November, far above the estimate of 50k. Besides, ADP revised last month’s figure from 106k to 119k. The greenback was boosted by this robust job report. The market will focus on November employment report to be released by the Labor Department this Friday.
read more:Robust ADP Boosted Dollar, Eyes on BOE ECB


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Yen Benefited From Credit Stress

The market is still cautious about the credit tightening issue, which put the dollar under pressure and encourages carry trades.

One of the biggest credit rating agency, Moody’s Investors Service, said last Friday it is preparing to lower credit ratings on 105 billion of debt since the subprime mortgage financial crisis.

read more:Yen Benefited From Credit Stress


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USD Softer, Awaits Data

The currency market has much to digest this week as traders look ahead to monetary policy decisions from several central banks, including the BoC, RBA, BoE and ECB. The greenback relinquished some of last week’s gains in early Monday trading, slipping against the sterling and yen. The major currency pairs will likely be dictated by a combination of sentiment over global interest rate differentials as well as any new revelations from the subprime debacle and credit crisis.
read more:USD Softer, Awaits Data


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GBP Pounded by BoE

The greenback was mixed in the Wednesday session, advancing versus the British pound and the yen while struggling against the euro and Aussie. With the exception of the sterling, the higher yielding currencies rallied against the yen as speculators continued to jump back into the carry trades following the sharp unwinding of recent sessions.

Economic data from the US were largely softer than expectations. The October PPI increased by 0.1% on a monthly basis, down from a 1.1% increase previously while the annualized PPI jumped to 6.1% from 4.4% previously. Core PPI was flat on a monthly basis versus 0.1% previously, but the yearly core PPI jumped to 2.5%, from 2.0%. Meanwhile, retail sales for October were weaker with the headline report inline with estimates at 0.2%, but down from the previous month at 0.6%. The excluding-autos retail sales figure missed expectations, down to 0.2% versus 0.4% a month earlier.
read more:GBP Pounded by BoE

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Data Caps USD Gains

The greenback posted its largest weekly gain on a trade-weighted basis in a month despite relinquishing its grip in Friday trading. Nevertheless, lingering fears over credit conditions and the credibility of banks’ balance sheets continue to plague the currency. Accordingly, the currency market will continue to be closely correlated with equity market moves – particularly the trajectory of the carry trade pairs, amid times of heightened volatility.

Economic data released earlier in the session derailed the dollar’s rebound against the majors, pushing it toward session lows versus the euro and sterling. Industrial production for October fell by 0.5%, missing expectations for a 0.1% increase and reversing the previous month’s 0.2% increase. The decline in industrial production also marked its largest drop in over two-years, reinforcing fears that the housing slowdown continues to weigh on manufacturing. Capacity utilization was largely inline with expectations at 82.0%, down marginally from the previous month at 82.1%. The September TICs report revealed a net outflow of $14.7 billion versus a downward revised outflow of $150.7 bil
read more:Data Caps USD Gains


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Yen Fall as Global Stocks Surge

The yen fell versus high-yielding currencies as global stocks rebounded this week. Carry trades came back to the market as investors regained their risk appetite.

The greenback gained as US corporations squared positions to realize profits on financial statements by the end of the month. The euro dipped to lower 1.46 versus the dollar, and the sterling fell to below 2.06.
read more:Yen Fall as Global Stocks Surge


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