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Currencies Update: Dollar continues its slide despite the improvement in growth data
Written by article default Thursday, 30 September 2010 12:24
The US dollar resumed its decline against a basket of major currencies despite the surge in annualized GDP for the second quarter to 1.7%, beating estimates of 1.6%.Also, US initial jobless claims for September 25 fell to 453 thousands compared with the revised of 469 thousands.
The upbeat data gave a boost US stocks and to higher-yielding currencies.
The dollar index, which tracks the dollar movements versus six major currencies dropped to 78.58 compared with the day's opening price at 78.77 to continue its fall for the third consecutive week.
With regard to the dollar-yen pair, it is continuing its downside direction paring most of the rise that took place after the BoJ intervention on September 15 which may raise speculation those Japanese policy makers may intervene again, which may coincide with an upside correction as the pair is currently oversold as depicted by momentum indicators.
So far, the pair is trading at 83.40, reporting a high of 83.80 and a low of 83.14, whereas the trading range for today is among the key support at 82.40 and the key resistance at 84.40.
Concerning the euro-dollar pair, it pared its earlier drop when it fell to a low of 1.3557, rising to a high of 1.3681 after the release of the upbeat US data.
Recently, the euro has been taking advantage of the fraught US outlook and persistent worries that the Fed will add to the current stimulus to boost recovery.
A German report released today showed that unemployment retreated to 7.5% in September from 7.6% in August, but it was offset after the Irish government said it may need up to 50 billion euros to have more control over Anglo Irish Banks and increase cash in Allied Irish Banks and Moody's Investor Services downgraded Spain's top rating by one notch to “Aa1” from “Aaa."
Now, the pair is trading at 1.3645 whereas the trading range for today is among the key support at 1.3420 and the key resistance at 1.3775.
Moving to the sterling-dollar pair, it fell after visiting a high of 1.5921as it approached psychological level at 1.60 as Fisher mentioned that it would take the BoE some years to recuperate from the excess lending and he expects the interest rate to rise above the pre-crisis levels.
Fisher announcements added to concerns following previous statement of BoE's Posen who mentioned that the Central bank should buy more assets to enhance growth.
Meanwhile, the pair is trading at 1.5750 falling to a low of 1.5715, whereas the trading range for today is among the key support at 1.5725 and the key resistance at 1.6000.