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USD
The US Dollar started out the trading session on Wednesday down, after Russia’s Central Bank said it is going to begin diversifying its reserves by lightening up on Dollar backed securities and purchasing IMF issued binds instead.
However, during the latter part of the session, when the US markets opened, the Dollar rebounded after the US government released their “Beige Book” report, which showed that there are significant signs the recession is easing.
Speculation on the street is that the hopes for an imminent recovery are overdone and that rising energy commodity prices such as oil and coal could put a damper on things which will spark a safe-haven US Dollar rally. Oil rose above $71.50 per barrel for the first time in over eight months on Wednesday, which also helped the Dollar’s recovery.
At 11:30 PM GMT, the Dollar was trading up .9% to the Japanese Yen, up .25% to the Sterling, up .43% to the Canadian Dollar to 1.1089, up .25% to the Australian Dollar to .8037 and up .19% to the Swiss Franc to 1.0804.
EUR
The Euro was up broadly in the early part of the session, after Russia made their announcement regarding dumping the Dollar and stocking up on IMF bonds. Forex Online traders were also speculating that key economies in the world were firming up and that would ultimately reduce the safe haven appeal of the Dollar driving issues, like the Euro up.
However, after the American markets opened and New York Light Sweet Crude Oil rose to near $72, fears that rising energy costs took hold and reversed the Euro’s gains.
At 11:45 PM GMT, the Euro was trading down .53% to the US Dollar to 1.399, down .86% to the British Pound Sterling to .855, down .155 to the Canadian Dollar to 1.551, down .81% to the Australian Dollar to 1.7407 and down .36% to the Swiss Franc to 1.5114. The Euro was up .25% to the Yen to 137.33 for the day.
Commentary
A little insight into Russian declaration as it is important to understand. Russia currency holds about 30% of their estimated 400 Billion Dollars in reserves, which translates into roughly 140 Billion Dollars worth of US issued debt.
The idea that they will diversify is overblown as they already are diversified. Even if they were to sell all their US holdings, it would not hurt the value of the US debt yields, as the sheer volume of US outstanding debt is enormous. The US plans in issuing over 2 Trillion Dollar in fiscal 2009 alone.
Aside from this, the IMF does not yet have bonds to issue. It is a matter which they are currently discussing and would probably not be issued, if ever, before the middle of 2010.
The US Dollar started out the trading session on Wednesday down, after Russia’s Central Bank said it is going to begin diversifying its reserves by lightening up on Dollar backed securities and purchasing IMF issued binds instead.
However, during the latter part of the session, when the US markets opened, the Dollar rebounded after the US government released their “Beige Book” report, which showed that there are significant signs the recession is easing.
Speculation on the street is that the hopes for an imminent recovery are overdone and that rising energy commodity prices such as oil and coal could put a damper on things which will spark a safe-haven US Dollar rally. Oil rose above $71.50 per barrel for the first time in over eight months on Wednesday, which also helped the Dollar’s recovery.
At 11:30 PM GMT, the Dollar was trading up .9% to the Japanese Yen, up .25% to the Sterling, up .43% to the Canadian Dollar to 1.1089, up .25% to the Australian Dollar to .8037 and up .19% to the Swiss Franc to 1.0804.
EUR
The Euro was up broadly in the early part of the session, after Russia made their announcement regarding dumping the Dollar and stocking up on IMF bonds. Forex Online traders were also speculating that key economies in the world were firming up and that would ultimately reduce the safe haven appeal of the Dollar driving issues, like the Euro up.
However, after the American markets opened and New York Light Sweet Crude Oil rose to near $72, fears that rising energy costs took hold and reversed the Euro’s gains.
At 11:45 PM GMT, the Euro was trading down .53% to the US Dollar to 1.399, down .86% to the British Pound Sterling to .855, down .155 to the Canadian Dollar to 1.551, down .81% to the Australian Dollar to 1.7407 and down .36% to the Swiss Franc to 1.5114. The Euro was up .25% to the Yen to 137.33 for the day.
Commentary
A little insight into Russian declaration as it is important to understand. Russia currency holds about 30% of their estimated 400 Billion Dollars in reserves, which translates into roughly 140 Billion Dollars worth of US issued debt.
The idea that they will diversify is overblown as they already are diversified. Even if they were to sell all their US holdings, it would not hurt the value of the US debt yields, as the sheer volume of US outstanding debt is enormous. The US plans in issuing over 2 Trillion Dollar in fiscal 2009 alone.
Aside from this, the IMF does not yet have bonds to issue. It is a matter which they are currently discussing and would probably not be issued, if ever, before the middle of 2010.
Replies to This Discussion
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Permalink Reply by princess Todd on -
Safe Haven Appeal Returns to the Dollar as Market awaits G8 Summit
USD
As investors took the weekend to contemplate the bad economic data out of the US and Euro Zone last week, the Dollar benefitted most of the session on Monday as a return to safety took over the market.
Data released on Monday out of the US showed that the services sector shrank at a slower rate in June than in May, a positive sign, however that data was not enough to overcome the whopping 470,000 job losses that were reported last week which was 100,000 more than anticipated.
As the session wound to a close, the Dollar was in retreat giving back much of its gains to the Australian and Canadian Dollars after the rise in oil prices during last week helped the commodity currencies recover.
At 11:35PM GMT, the US Dollar was up .3% to the British Pound to 1.6282, up .03% to the Australian Dollar to .7975, up .1% to the New Zealand dollar to .6366, even with the Canadian dollar to 1.1595, and down .8% to the Australian Dollar to 95.29.
EUR
A report out of the Euro Zone showed an unexpected decline in investor and analyst sentiment on Monday as European Stocks fell hard bringing the Euro down with them.
Speculation that recovery was beginning in the Euro Zone was dashed last week after a bad jobs report and negative comments about the timeline for recovery were made by Central Bank President Trichet, after the ECB’s policy meeting.
Trichet set the recovery expectations out to the latter part of 2010 after hinting several months back that it could happen in the second half of 2009.
At 11:45PM GMT, the Euro was up .03% to the US Dollar to 1.3981, down .65% to the Japanese Yen to 133.36, up .3% to the Sterling to .8585, down .1% to the Canadian Dollar to 1.6213, down .01% to the Australian Dollar to 1.7536 and down .1% to the Swiss Franc to 1.5173.
What is going on?
This week sees central bank policy decisions in Australia and the England, while in the United States, the corporate earnings season for the second quarter gets underway.
But the primary focus of the week is the Group of Eight (G8) summit on July 8-10, with investors watching for the possibility of a debate on an alternative to the Dollar as a world reserve currency.
Though any move by central bank reserves away from the Dollar would take several years to materialize, Forex investors are nervous about what comments may be made at this week's G8 meeting, particularly by China. -
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Permalink Reply by princess Todd on
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USD
The Federal Reserve kept interest rates at current levels but extended the long-term debt purchasing program, to the tune of $300 Billion. The move helped vault the higher yielding currencies in a display of risk appetite and gave caution to traders who were thinking that all was well in the US economy. While the Fed did say that the situation was much improved, and essentially gave no negative economic comments, the fact that they are extending the bond buying program signals that the US economy is still vulnerable and at risk of turning negative very quickly.
In the past few treasury sales, the Federal Reserve has been the primary bidder, essentially printing money in order to accomplish the purchases. The US economy according to many analysts is at risk if inflation as a result of the aggressive spending and debt issuance. Year to date, the US debt has increased by $1.27 Trillion in the fastest and most expensive spending spree on record.
At 3:00AM GMT, the US Dollar was down .25% to the Euro to 1.4221, down .22% to the British Pound to 1.6507, down .15% to the Canadian Dollar to 1.0895, down .4% to the Australian Dollar to .8361, down .35% to the New Zealand Dollar to .6737 and down .16% to the Swiss Franc to 1.0763.
Other news.....
Norway's central bank held rates at a record low, but opened the door for increased borrowing costs sooner than expected as the economy continued to recover. Chinese stocks sank on Wednesday on fresh worries that this year's equity rally was running ahead of an economic recovery and bank lending was showing signs of cooling.
There are no major economic reports or data today, so trading should be focused still on yesterday's reports.
Read more at: http://www.finexo.com/marketReview/day/2009-08-13 -
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