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UFXBank Forex News: USD/JPY Strengthens After Moody's Downgrade

Written by article default Wednesday, 01 June 2011 07:00

USD Dollar (USD) – The dollar traded mixed versus most of the major currencies due to poor US macroeconomic indicators on one hand, and a rates increase in the finance markets on the other. U.S. consumer confidence declined to a six-month low, coming out at 60.8, from a revised 66 reading in April. The Chicago purchasing-manager gauge dropped to 56.6 in May, from 67.6 in April. Home prices were down 4.2 percent from the previous three months, the biggest one-quarter drop since the first three months of 2009. Employers probably hired fewer workers in May and manufacturing cooled as the jump in fuel costs and the effects of Japan’s earthquake rippled through the U.S. The employment data expected to come out this week will be the key to really see “what’s happening” in the U.S. economy. The financial markets closed positive with the Nasdaq rising by 1.37% and the Dow jones gaining by 1.03%.  Crude oil jumped by 2.80%, closing at $103.10 a barrel. Oil rose on signals that the European Union will approve aid for Greece, bolstering the euro against the dollar.  Prices also advanced after TransCanada Corp. (TRP) shut the Keystone pipeline that sends Canadian oil to the U.S. Gold (XAU) fell by 0.20% and closed at $1,535 an ounce. Today, ADP Non-Farm Employment Change is expected to rise to 177K vs. 179K previously. Today, the ISM Manufacturing PMI is expected to come out at 58.1 vs. 60.40 previously, and Treasury Secretary Geithner will speak.

Euro (EUR) – The euro strengthened in forex trading against the U.S Dollar due to further Greece solutions. Juncker head of the euro-area finance ministers’ group, said that European Union leaders will decide on additional aid for Greece by the end of June and have ruled out a “total restructuring” of the nation’s debt. The euro rose despite the fact that Inflation in the 17-nation euro region slowed to 2.7% from 2.8% in April. Trading above the support level of 1.4320 will keep the momentum positive for the pair. Overall, EUR/USD traded with a low of 1.4067 and with a high of 1.4436. Today, ECB President Trichet will speak.

EUR/USD – Last: 1.4420

British Pound (GBP) – The Pound fell against the Greenback after trying to break its resistance of 1.6550 with no success. The trend for the pair is bearish if the pair maintains its resistance level of 1.6500. Overall, GBP/USD traded with a low of 1.6057 and with a high of 1.6546. Today, the Manufacturing PMI is expected to show 54.2 vs. 54.6 previously.

GBP/USD - Last: 1.6460

Japanese Yen (JPY) – The dollar strengthened against the yen for the second day after Moody’s Investors Service signaled it may cut the country’s credit rating. The trend for the pair is bullish. If the pair will succeed to maintain its support of 81.00, it may bring the pair to test again at 81.80. Today, Capital Spending q/y is expected to rise by 3.20% vs. 3.80% previously.

USD/JPY-Last: 81.30

Canadian dollar (CAD) – The Canadian Dollar strengthened against its U.S. counterpart due to hawkish comments from the BOC. Despite keeping interest rates unchanged at 1.00%, the BOC said for the first time since the recession, that "some of the considerable monetary policy stimulus currently in place will be eventually withdrawn, [and is] consistent with achieving the 2 per cent inflation target".

USD/CAD - Last: 0.9680