In the past week, EURUSD has lost more than 200 pips from its record highs. But recent evidence shows signs of a retracing, with support for the euro regaining strength. But it’s not like currency traders have fallen back in love with the euro. Most of the movement in the currency pair in recent days [...]
Archive | July, 2007
Risk Aversion and Asian Growth Compete for the Direction of the Forex Market
Global equities markets took a beating last week. The phenomenon began in the United States (on the back of subprime mortgage concerns) and it spread to the financial markets in other countries. For the forex market, the primary impact of the losses was a return of risk-aversion. The risk appetite of currency traders has waned, [...]
Euro Makes Small Comeback on U.S. Dollar
Despite last week’s small gains against the euro, the U.S. dollar fell against the European currency on speculation of further weak U.S. growth. It may seem like old news, but investors fear further losses on securities backed by subprime mortgages to weaken the U.S. economy. Today, Germany’s IKB Deutsche Industriebank AG reported losses directly linked [...]
Carry Trades Unwind on Risk-Aversion
Yesterday’s report on the extremely sluggish U.S. housing market sent equities markets crashing, investors dumping corporate debt, and currency traders unwinding carry trades. New U.S. homes sales for June fell 6.6 percent. This number has jumped significantly from the 2.2 percent decrease in May. According to a Bloomberg article, this may be a no end [...]
US GDP Strong But Does Not Carry Momentum
The GDP release for the second quarter came out strong this morning, printing at 6.4% annualized growth versus 3.2% expected. This was on top of a revised 0.6% pace for the first quarter of 2007. The dollar was already trading upwards early this morning and in European trading in anticipation of a positive release. EUR/USD [...]
The Yuan Story
Today’s fall in Asian major currencies prompted a decrease in the Chinese yuan against the U.S. dollar. The Chinese currency dropped 0.1 percent to 7.5655 against the dollar at 5:30 p.m. in Shanghai from yesterday’s close of 7.5581. Despite taken off the fixed-exchange rate against the dollar in July 2005, the Chinese central bank sets [...]
Yen Crosses Start Their Fall
Yen carry trades have dominated the forex market for the past couple of months. With international equities markets booming and high yields to be found in other countries, traders have been borrowing the yen on the cheap to finance their investments. That has brought the yen to multi-decade lows against all the highly traded currencies. [...]
U.S. Equities Boost Helps Dollar
Better than expected profit reports by Amazon.com and Boeing marked a strong opening for U.S. stocks this morning. Average profit growth from 40 percent of companies in the S&P for the second quarter rose 9.6 percent. This number beat expectations of 5.8 percent growth by Bloomberg analysts. In response, the dollar has made a major [...]
Is the Pound the New Dollar?
In the London market last night, EUR/USD underwent the correction that we had predicted yesterday. The euro fell amid concerns that the forex market was overextended. But there’s another currency that has performed even better against the US dollar: the British pound. GBP/USD seems to reach new multi-decade highs every day. The early momentum in [...]
Canadian Dollar and Pound Make Unprecedented Gains
The Canadian dollar rose to a 30-year high following a report that showed retail sales in May having increased at the fastest rate in almost ten years. Retail sales rose 2.8 percent in May, up from the .2 percent increase in April. This news prompted investors to speculate interest rate hikes by the Canadian central [...]
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