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Currencies Update: Fed quantitative easing concerns depreciate the dollar
Written by article default Friday, 01 October 2010 03:17
US single currency fell to the lowest level in six-months against the euro on concerns that the Fed quantitative easing measures that might be introduced to markets will affect the value of the dollar and pressure the single currency to depreciate further.The greenback fell on the US dollar index, which tracks the performance of the dollar against six majors, reaching 78.20, compared with the previous 78.64, where the index reached the highest at 78.75 and the lowest at 78.14.
The news from the US yesterday showed that the economy expanded by 1.7 percent during the second quarter of this year, compared with the previous estimate of 1.6 percent that was reported in the advanced reading.
Investors await the release of US income and spending reports which is projected to rise by 0.3 percent for both indices.
Inflation in the US remains under control and below the Fed desired rate of 2.0 percent, according to the Core PCE report forecast. The report will be released at 12:30 GMT.
The ISM manufacturing in September is projected to drop to 54.5 from 56.3. Europe’s manufacturing data that was released earlier today showed easing conditions, raising concerns that the economic recovery might flounder in the upcoming period.
The euro-dollar pair extended its rise to trade at 1.3726 compared with the opening levels of 1.3631. The pair is projected to rise further on a daily basis as it breached 1.3680, the pair is targeting 1.3810.
The pound slashed its decline that was witnessed yesterday and rose to trade at 1.5819 against the dollar. The pair’s trading opened at 1.5713 while reaching a high of 1.5871 and a low of 1.5701.
An intraday upside move is projected, targeting 1.5900 – 1.5935, requiring a daily closing to remain above 1.5675.
Meanwhile, the yen extended its rise against the dollar, where the USDJPY pair depreciated further nearing 83.00 levels. The pair opened trading at 83.50 while currently it’s trading at 83.16, where it reached the highest at 83.57 and the lowest at 83.14.
Further downside movement is projected for the pair, targeting 82.40 and 81.60 but requires consolidation below 83.60 and stability below these levels.
The Franc weakened against the euro due to the decline in the manufacturing sector that fell to the lowest level since February in Switzerland, while the retail sales eased during August, accordingly, the Franc dropped for the third day to trade at 1.3427 against the euro, while gaining against the dollar where the USDCHF pair dropped on the daily scale to 0.9775, compared with the opening levels of 0.9822.
A bearish intraday movement is projected today, targeting 0.9705, but requires stability below 0.9855 where if breached, the pair will rise to target 1.0000 levels.
The Czech Koruna gained the most in nearly two-years against the euro on speculation the Czech Central Bank might hike interest rates due to the improvement witnessed in the country’s manufacturing sector.
The Koruna advanced to 24.377 against the euro, the strongest intraday level in nearly two-years.