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Ahead of FOMC, the dollar lose momentum
Written by article default Tuesday, 21 September 2010 14:18
The dollar fell for the second consecutive day ahead of the release of FOMC rate decision that is due to be released today at 18:15 GMT.The performance of the dollar against six major currencies as noted in the US dollar index showed a depreciation of the dollar, where the index is currently trading at 81.01, compared with the opening levels of 81.20. The index reached the highest at 81.32 and the lowest at 80.94.
The dollar is losing momentum ahead of the release of US housing data along with the release of FOMC rate decision that is projected by markets that the Fed will preserve its interest rates at record lows among 0.0% - 0.25%.
Signs of slowing economy in the US halted the rise the dollar enjoyed over the past six-weeks against the euro, due to the speculation that the Federal Reserve will introduce more stimulus money to sustain growth.
The euro-dollar pair appreciated in today’s trading session to breach the resistance at 1.3121, in attempt to build a strong trading base above these levels to extend the rise to target 1.3200 – 1.3335, but a four-hour closing above 1.3015 is necessary to achieve those targets.
The pair is currently trading at 1.3130, compared with the opening levels of 1.3061, setting a high of 1.3149 and a low of 1.3055.
The Federal Reserve is projected to preserve rates, but also to introduce more stimulus to sustain growth, which might devalue the dollar against majors in the upcoming period.
Meanwhile investors are also awaiting the release of BoE’s Minutes regarding the last rate decision, with expectations showing that member Sentance called for the third time for a benchmark hike to 0.75 percent to control the country’s increasing inflation threats.
The British pound depreciated against the dollar for the second consecutive day ahead of the release of tomorrow’s Minutes by the BoE, where the pair is currently trading at 1.5513, compared with the opening levels of 1.5543 while setting a low of 1.5501.
A bullish trend is projected for the pair with initial targets at 1.5700 but for these expectations to prevail, the pair must sustain trading above 1.5555.
With regards to the Yen, the dollar gained against the yen despite the intervention of Japan’s government in markets, where the pair is trading at 85.48, compared with the opening levels of 85.68. Nonetheless, a bullish intraday direction is projected for the pair with targets at 87.35 where it’s vital for the pair to achieve a daily closing above 84.00 levels to achieve those targets.
As for other currencies, the Australian dollar extended its rally against the dollar, as it’s targeting the resistance at 95.0 cents and 96.50 cents respectively.
Analysts believe that the MACD along with MA has been showing signs of supporting the Australian dollar to extend its rise against the US dollar but achieving those targets at the previously mentioned resistance might trigger investors to sell and twist to profit taking techniques.
The Australian dollar depreciated on the daily scale to trade at 0.9462, compared with the opening levels of 0.9471. The pair reached the highest at 0.9479 and the lowest at 0.9439.
Meanwhile, the Canadian dollar appreciated against the dollar, supported by the rise in stocks, where the USDCAD pair traded slightly higher at 1.0282, compared with the opening levels of 1.0279, noting that the pair reached the highest at 1.0311 and a low of 1.0277.
The rise in the Canadian dollar is supported the recent rally recorded throughout this month due to the US-Canada yield differential.
Finally the Swiss France advanced as investors sees the currency as a safe have to invest, supported as well by the fact that the Federal Reserve may hint to provide markets with a new Asset Purchase Facility program.
The Swiss France traded higher against 11 of its 16 major counterparts. The main driver for the Franc is speculation that the Fed will announce further stimulus measures, which boosts the currency’s appeal among traders as a safe investment, which prevented the SNB last week from raising interest rates in order to control the mounting inflation levels in the country due to higher Franc.
The USDCHF pair traded lower at 1.0018, recording a high of 1.0073 and a low of 1.0013, all compared with the opening levels of 1.0045.