Members login
Currencies Update: Mixed sentiment with the start of a new hectic week
Written by article default Monday, 27 September 2010 11:43
The sentiment today remains the dominant factor in the market with the lack of data queued for release. Nonetheless, this week we have heavy data to be released with growth estimates from UK and the US alongside other industry reports that might help shape the outlook for the global economy.Investors are still worries and jittery about the outlook for the global economy, still seeking haven demand and supporting the precious yellow to stabilize at its new established record range, recording today the high of $1299.82 and still hovering above $1299 areas.
The dollar is trading flat by midday off early highs recorded at 79.54 currently hovering around 79.30 areas. Greenback is weak and will be so as long as investors continue to focus on quantitative easing and further stimulus measures from the Feds where the flood of dollars will keep the pressure on the dollar and unwinding any haven demand from the federal currency.
Surely the dollar’s new fundamentals and most prominently the QE has kept the pressure seen on the Japanese yen the most. The Japanese government intervened in the market for the first time since 2004 by unilaterally selling its currency to support the recovery, and from today’s trade figures we can surely see exports hit indeed from sluggish global demand and a stronger yen. The dollar’s weakness offset the move from Japan and though we saw news that Japan sold its currency again of Friday the effect was not as strong as seen on the market the previous run.
The yen has trended marginally lower since hitting the intervention high above 85.00 areas and currently hovering flat around 84.15. The pair is likely to biased higher in the coming period especially as investors fear a new round of yen selling from Japan as well as news today of a new stimulus package to be unveiled from the government which will support risk and deter haven demand.
As for the single currency, the euro, the market is jittery regarding the prospects for indebted nations to continue expanding while attaining their ambitious budget targets. This jittery sentiment is merely correctional following last week’s strong gains and fueled by anticipation for Ireland’s final disclosure of the costs to bailout Anglo Irish Bank Corp which deteriorated the nation’s balance sheets and pushed their stance to the worst on the budgetary deficit lane.
The euro has trended lower in correction since morning setting the low of 1.3423 and currently trading higher around 1.3470 areas. Still the pair is heavily overbought and likely to continue to move lower to unload negative momentum to be able to continue the general bullishness expected which remains intact as far as trading is above 1.3330 areas.