Forex:Pound Gets Hammered by King by Korman Tam

The greenback climbed higher against the majors amid weaker US data and a pullback in commodities prices. The major stock indexes drifted lower, with the Nasdaq and S&P 500 sliding by over 1% and the Dow Jones drifting lower by 0.5%.

Weekly jobless claims improved from the previous week, declining to 530k from 545k. However, August home sales eased up, slipping 5.1 million units from 5.3 million units a month prior.

Sterling Dragged Lower by Jawboning


The pound sold off sharply in the Thursday session as government jawboning hammered the currency against the euro and the dollar. The sterling plunged to its lowest level in 6-months at 91.55 and a 2-month low against the dollar at 1.6020. The catalyst for the sharp sell-off was comments from Bank of England that suggested a weaker currency would be beneficial to stabilizing the economy. UK Prime Minister Gordon Brown echoed a similar tone, saying “all factors that make for a stable economy” are welcome.

Cable trades just above the 1.6060-figure with interim resistance starting at 1.6080, followed by 1.61 and 1.6130. Subsequent ceilings are eyed at 1.6170, backed by 1.62 and 1.6240. On the downside, support starts at 1.6040, followed by 1.60 and 1.5960. Additional floors will emerge at 1.5930, backed by 1.59 and 1.5870.

Euro Slumps against USD

he euro tumbled lower to the 1.4620 mark versus the dollar amid a general slump in commodities and equities in the Thursday session. Germany’s September Ifo sentiment survey missed consensus estimates, improving to 91.3 instead of forecasts for an increase to 92.0 from 91.3. The Ifo expectations component improved to 95.7 from 95.0 in August, albeit less than the expected improvement to 96.5 and the current conditions index improved to 87.0 from 86.1.

The calendar for the coming session is light, with just the release of August M3 money supply, seen declining to 2.7% from 3.0%.

EURUSD holds steady around 1.4650, with resistance seen at 1.4675 and 1.47. Additional ceilings will emerge near 1.4740, followed by 1.4770 and 1.48. Losses will be tempered at 1.4630, backed by 1.46 and 1.4550. Subsequent floors are eyed at 1.4520 and 1.45.

Forex:Greenback Slumps on Shift to Riskier Assets by Korman Tam

The dollar’s respite proved short-lived as traders resumed selling the currency in the Thursday session, pushing it to a fresh one-year low against the Australian dollar at 0.9088 and two-week low against the euro at 1.4816. The equity, commodity and energy markets were in lockstep as spot gold touch record high for its third consecutive session past the $1,055 per ounce level and crude oil edging back above the $70 per barrel level near $72. The major US equity bourses also climbed higher, with the S&P 500 and Nasdaq advancing by nearly 1% in the afternoon session.

The economic data released earlier in the session saw weekly jobless claims improve to 521k from 551k a week prior and the August wholesale inventories slip by 1.3% from a 1.4% decline in the previous month. Speaking earlier today was Richmond Fed President Lacker reiterated that the economic outlook remains unchanged from the previous FOMC meeting, adding that the risk of sliding into a recession again in 2010 has diminished substantially. He also quelled speculation of impending rate hikes advising that the Fed should not tighten policy today.

Euro Edges Past 1.48
The euro touched a two-week high at 1.4816 on the heels of the ECB monetary policy decision in morning trading. As expected the ECB left interest rates unchanged at 1.0%, but the focus largely hovered over the subsequent press conference from Bank President Trichet for a sense of whether the ECB follow the RBA in tightening monetary policy. Trichet said that current interest rates are appropriate and a return of inflation to moderate positive rates expected within coming months. He added that he expects to see a period of stabilization and gradual economic recovery. Moreover, Trichet suggested that the recent survey indicators support for the view the Eurozone economy is stabilizing. Although Trichet didn’t provide clear signals that interest rate increases were imminent, it can be interpreted that rates have bottomed and the next move by the Bank will rate hikes instead.

EURUSD holds steady near 1.48, with support seen at 1.4760, followed by 1.4730 and 1.47. Subsequent floors are eyed at 1.4650, backed by 1.46 and 1.4570. On the upside, gains will target 1.4830, followed by 1.4860 and 1.49. Additional resistance will emerge at 1.4940, backed by 1.4980 and 1.50.

Forex News:USD/JPY: Dollar declines below 93.00, fresh 7-week low

The Dollar has opened he week on a weak ppace, and the pair, dropped from levels around 93.50 at the opening, to break below 93.00 to reach a fresh 7-weeks low at 92.55. At the moment of writing, the Dollar trades at 92.75.

Initial support level lies at the mentioned 92.55 session low, and below here, 92.30 and 92.00 psychological level. On the upside, resistance levels are 93.20/40 (Aug 27 and 21 low) and above here, 93.65 and 94.10 (Aug 28 high).

EUR/JPY has opened the week heading south as decline from 135.00 high on Friday has extended during Asian session, with the Euro breaking below support level at 132.90 to test 5-week low at 132.15. Bellow current levels, next support lies at 131.60 and 130.90/895: Resistance levels are 132.90 and 133.30.

by fxstreet.com

Forex: Japan PM Aso: To Resign As LDP President

Japan PM Aso: To Resign As LDP President
Sun, Aug 30 2009,


Japan PM Aso: To Resign As LDP President

TOKYO -(Dow Jones)- Japanese Prime Minister Taro Aso on Sunday conceded his party's defeat in Lower House elections and said he will resign as the party chief to take responsibility.

"I must accept responsibility" for the Liberal Democratic Party's expected major losses, Aso said during a televised interview with Japanese national broadcaster NHK.

Exit polls show that the Democratic Party of Japan is set to score a landslide victory, ousting the LDP from power for the first time since 1994.




August 30, 2009 by Dow Jones & Company, Inc

Forex news: Global Equity Slump Hits FX

Global Equity Slump Hits FX by Korman Tam


Fears over the sustainability of the global economic recovery hit the major equity indexes, with the Shanghai Composite index being pummeled by nearly 6% and Tokyo’s Nikkei index plunging by over 3%. Risk aversion was the key driver in the foreign exchange market on Monday, prompting a rally in both the dollar and yen. The greenback pushed the pound to its lowest level in one-month beneath the 1.63-level and the euro to a two-week low just beneath the 1.4050-handle. The US equity bourses tumbled at the start of the week, albeit faring better than their Asian counterparts. The Nasdaq led the declines, tumbling by over 2.5% while the Dow Jones was lower by 1.75% and the S&P 500 losing 2.15% by the afternoon session.

US economic reports released earlier today included the August NY Fed manufacturing survey, June TIC data, and the NAHB housing index. The NY Fed manufacturing survey improved by more than expected in August to 12.08, sharply beating forecasts for an improvement to 3.00 versus a reading of -0.55 from July. The June TIC report revealed net purchases of $71.3 billion versus revised net sales of $36.9 billion in the month prior. Meanwhile, the August NAHB housing index edged up in line with expectations to 18, versus 17 from July.

The calendar for Tuesday consists of July housing starts, building permits and the producer price index. Housing starts in July are expected to improve 600k units, up from 582k units in the previous month. Building permits are seen edging up to 580k units, versus 570k units in June. Meanwhile, headline PPI is estimated to decline by 0.3% from a 1.8% increase a month earlier and fall by 5.9% compared with a 4.6% drop in the previous year.

JPY Surges

Traders propped the Yen higher against the major currencies, dragging the euro lower to 132.53 and the pound to 153.52. Economic data from Japan revealed growth in the second quarter at 0.9% q/q and 3.7% y/y. Despite the upbeat figures, the Nikkei tumbled to its lowest level in 2-weeks, down by over 3% as traders questioned the sustainability of Japan’s economic rebound.

EURJPY hovers near the 133-figure and remains poised to further test the downside. Following last Tuesday’s break lower of the ascending trendline near the 138-level, the euro/yen pair has moved sharply lower, paving the way for additional losses to the 61.8% Fibonacci retracement of the move from 126.98 to 138.70, located at 131.40

Forex news: USD Edges Up, Eyes FOMC

USD Edges Up, Eyes FOMC by Korman Tam


The dollar and yen were higher in Tuesday trading amid renewed declines in the equity bourses. The Nasdaq and the S&P 500 were lower by 1% and the Dow Jones softer by 0.75% in afternoon trading. Earlier US economic reports were mixed with Q2 labor costs falling by more than expected to -5.8%, compared with a negative revised Q1 figure at -2.7% and a sharply higher than forecast preliminary Q2 productivity reading, up by 6.4% versus a downwardly revised Q1 reading at 0.3%.

The FOMC kicked-off its two-day monetary policy meeting today and will be announcing its decision on Wednesday afternoon at 2.15 PM. The Fed is not seen changing interest rates from its current range of 0-0.25%. However, with the Treasury’s purchase plan set to expire in September, it will be interesting to see how the Fed will tackle the issue of extending the plan or permitting it to expire.

Sterling Remains under Pressure:

The British pound drifted lower against the dollar, remaining mired beneath the 1.65-level to a session low around 1.6434. The UK June trade deficit was slightly larger than expected, increasing to 6.451 billion pounds, versus a revised May deficit of 6.174 billion pounds. The non-EU trade deficit edged up to 3.648 billion pounds compared with a downwardly revised 6.174 billion pounds in the previous month.

In the session ahead, traders will digest several key UK reports including the labor report and the Bank of England’s quarterly inflation report. The June ILO unemployment rate is estimated to edge up to 7.7% from 7.6% in the previous month and the July claimant count is seen rising to 28.0k versus 23.8k in June. Also to be closely scrutinized will be the BoE’s quarterly inflation report. Sentiment on the report is seen to be bearish for the pound following last week’s unexpected BoE quantitative easing through a 50 billion pound increase in the Bank’s asset purchase plan.

Cable hovers near 1.6475 with resistance starting at 1.65, followed by 1.6520 and 1.6560. Additional gains will emerge at 1.66, followed by 1.6640 and 1.6675. On the downside, support is seen at 1.6435, backed by 1.64 and 1.6370. Subsequent floors are eyed at 1.6340, followed by 1.63 and 1.6250.