After a week of losses versus most of the main traded currencies in

foreign-exchange markets, the Brazilian real advanced today fueled by a positive performance in commodities and equities markets.

The Brazilian real gained today versus the yen and the U.S. dollar as demand for commodities and optimism regarding the nation’s economy allowed the South American currency to revert a negative trend that lasted five consecutive days. A great sum of capital inflows to Brazilian stocks also influenced on the good performance of the real this Monday.

USD/BRL traded at 1.7661 as of 19:54 GMT from an opening rate of 1.7715.

If you want to comment on the Brazilian real’s recent action or have any questions regarding this currency, please, feel free to reply below.

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The U.K. currency profited today from an increase in the nation’s house prices, fueling even further speculations that the recession might be ending in Britain, attracting investors to purchase

pound-priced assets in a day of bullish equities markets in London.

In a day of predominant risk appetite as commodities and equities advanced in the U.K., the pound profited from an optimistic scenario in the country as Rightmove Plc, a leading British real estate website, indicated that house prices increased last month, adding evidences for speculations that Bank of England’s current asset purchase program may expire next month and not be extended further, which would certainly allow the pound to climb in foreign-exchange markets. The euro posted a slight decline versus the sterling as traders remained skeptical regarding Greece’s budget deficit and the European Central Bank’s capability of rescuing the Southern European nation from a financial collapse.

Several analysts believe that the pound may outperform multiple key-currencies in foreign-exchange markets this year, as the recession fades away and according to some speculations, the country’s currency would be undervalued. If positive data continues to be published the pound may experience a sharp rally, specially versus a less attractive euro in the following weeks.

EUR/GBP traded at 0.8803 as of 16:14 GMT from an opening rate of 0.8821 when markets opened yesterday. GBP/USD climbed to 1.6333 from 1.6258.

If you want to comment on the Great Britain pound’s recent action or have any questions regarding this currency, please, feel free to reply below.

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The Australian dollar fell sharply versus

lower-yielding currencies today as a real estate report declined optimism regarding the South Pacific economy, in a day were commodities and equities markets which have a strong correlation with the Aussie, declined.

Basically everything worked against the Australian dollar today as a report in the country showed that new home loans decreased the most in more than a year, in a day were equities dropped and demand for commodities declined, after China imposed new lending requirements for banks.

AUD/USD declined to 0.9200 as of 19:38 GMT from a previous rate of 0.9310. AUD/JPY dropped to 83.64 from 85.64.

If you want to comment on the Australian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

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Risk aversion declined significantly today after China set a new reserves requirements for banks in the country, allowing the yen to outperform all of the 16 main traded currencies in

foreign-exchange markets, as pessimism surged.

Equities markets in Asia and globally declined today, raising demand for the yen, as China set a minimum of 16 percent of reserves that large banking corporations in the country must have, in order to avoid a credit bubble as the one that caused the global slump in late 2008. The yen is considered the safest refuge in currency markets for turbulent times and benefited from today’s negative scenario, as China’s policy decreased demand for high-yielding assets, which were trading high since the beginning of the year. The Australian dollar posted the sharpest losses versus the Japanese currency as loan approvals in the real estate sector declined.

China’s strict regulations declined optimism that were fueling demand for higher-yielding since the last week, according to analysts. The yen had declined significantly after several sessions losing versus most currencies, as today’s shift in markets sentiment was a good opportunity for it to level up.

AUD/JPY fell to 84.23 as of 15:45 GMT from a previous rate of 85.53 in the intraday comparison. CAD/JPY followed the same trend at 87.72 from 89.08.

If you want to comment on the Japanese yen’s recent action or have any questions regarding this currency, please, feel free to reply below.

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The U.S. currency was performing quite well during most of this week’s session as optimism regarding the U.S. economy was high, but the employment data published on Friday forced the greenback down versus most of the main traded currencies, as figures came much below forecasts.

The dollar posted the biggest weekly in two months as a non-farm payrolls report indicated more jobs cuts than expected, frustrating forecasts and declining odds that the Federal Reserve will lift stimulus and start a series of interest rate hikes that would happen sooner-than-expected, as some speculations suggested, if the economy accelerated at a faster pace. Among the most important traded currencies, U.K.’s pound was the only not able to beat the dollar, as the recession in the U.K. continues a reality, with quantitative measures used by the Bank of England being ineffective so far and the parliament failing to reach a consensus regarding the nation’s budget deficit.

Analysts were frustrated as this week’s U.S. data didn’t meet their expectations, and traders sold dollar positions after the non-farm payrolls report were published, considering that the greenback had been trading high during most of the week as optimism was intense. Next week will provide a monthly retail sales report, which will be the next key-report to determine the dollar’s trends.

EUR/USD closed the week at 1.4408 after being traded around the 1.4300 level before the payrolls report came to public this Friday.

If you want to comment on the U.S. dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

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The greeback pulled back from its sharp sell-off on Thursday, as weak US economic data spurred a return to risk aversion.

• In early trading, the dollar continued to lose ground following the better-than-expected US growth data, however the GBP/USD rally was capped at 1.6600, and the UK currency pulled down steadily, eventually closing down 0.6% ay 1.6448.
• US markets went through losses on Friday, with financials and materials leading the path, as risk aversion returned after Thursday’s optimism, strengthening support for the greenback.
• On the macroeconomic front, data revealed that US consumer spending declined 0.5% in September, the largest decline since December 2008, further buoying the dollar rally.
• Positive manufacturing data from the Midwest in the afternoon failed to dent dollar buying in the markets and traders acknowledged that part of this may have been due to month-end flows into the US currency related to foreign portfolios.
• The US currency has continued to climb in trading this morning, currently half a percent up, as investors remain cautious ahead of big events this week, including interest rate decisions in the UK, eurozone and US.

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Better-than-expected GDP figures in the US caused risk appetite to surge across the board enabling the kiwi to post gains of over a cent against the pound.

• The solid GDP figure in the US renewed optimism about recovery in the global economy, prompting investors to buy higher-yielding currencies.
• The kiwi, which has suffered recently on a rise in risk aversion, was able to reverse losses as the positive data encouraged investors to buy up riskier assets.
• However, in trading this morning, the pound is recouping losses, pushing the price back near 2.27 as market participants return their thoughts to the RBNZ’s rate statement on Wednesday where they indicated that interest rates would not be raised for some time.

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Sterling extended sharp gains against the dollar, as traders cut short pound positions after many reckoned earlier bets against the currency were overdone.

• Sterling found support following further upbeat comments from a BoE member concerning the quantitative easing programme.
• Sterling reached up to a three-week high against the dollar, peaking just below 1.64 before closing the week at $1.6353.
• Initially sterling trimmed its position after sterling/dollar stop-loss orders were triggered at $1.6300, but some analysts noted that the pound would continue to be supported as investors had taken up fresh long positions in sterling and were willing to hold onto them.
• Sterling also found support from recent M&A talk, with Qatar’s sovereign wealth fund planning a renewed offer for the supermarket chain J Sainsbury.
• Sentiment towards the US currency remained weak as optimism about the global economic outlook, buoyed by a string of strong US corporate results, turned people away from the greenback in favour of perceived riskier currencies.

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The single currency pushed higher once again as the greenback suffered from rising appetite in the wake of positive economic signs.

• The dollar initially made after ECB President Trichet said that the US government and the Federal Reserve should pursue policies supporting a strong dollar and that excessive foreign-exchange volatility is an “enemy.”
• However the euro trimmed its losses in the afternoon following positive US data, which bolstered expectations that the economy is recovering.
• US jobless claims beat market forecasts dropping a further 10K week-on-week. The US CPI figure also rose marginally to 0.2%, supporting growing optimism over the economic recovery.
• The greenback also suffered after both Goldman Sachs and Citigroup reported better-than-expected earnings in the third quarter.
• Goldman Sachs posted a net income of $5.25 a share, compared with the average estimate of $4.18 a share, and profits for the period were $3.19bn, a four-fold increase from the same period in 2008.
• In trading this morning the euro has slipped back slightly but the price remains at near 14-month highs, hovering just above 1.49.

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Sterling achieved a three-week high of 1.6297 against the dollar yesterday, supported by upbeat comments about the UK economy.

• The pound jumped nearly three cents, or 1.8%, against the dollar on speculation that policy makers will pause their asset-purchase programme next month as the economy shows signs of recovering from the recession.
• The Financial Times cited Bank of England Markets Director Paul Fisher as saying that the asset purchases scheme may be paused to give the central bank the option “of doing more later.”
• Analysts suggested that it appeared that the Bank of England was letting it be known in more forceful terms that it is not talking the pound down any longer.
• Additionally, the pound benefited from broad dollar weakness as optimism about the global economy and buoyant earnings from Goldman Sachs and Citigroup encouraged investors to move into currencies seen as being higher risk.
• Data also revealed that US jobless claims dropped by another 10K week-on-week, and that the inflation figure increased to 0.2%, both of which beat market expectations, lessening demand for the haven currency.

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The dollar slid further against the euro yesterday as solid results from JP Morgan Chase and rising equities stoked optimism about an improving global economy.

• The euro extended its rally, hitting a fourteen-month high of 1.4943 against the greenback, boosted after data showed an acceleration in eurozone industrial output.
• Industrial production in eurozone rose for the fourth straight month in August, providing further evidence that the area’s economy is on track to post its first rise in gross domestic product in the third quarter since the first quarter of 2008.
• Pressure on the dollar was also added as every major stock market in Europe rose after New York-based bank JP Morgan Chase announced strong third-quarter earnings, adding to risk appetite.
• The dollar found little support against a broadly stronger single currency after data revealed that US retail sales fell by 1.5% in September, although they did top estimates of a drop of 2.0%.
• The euro has continued to push higher this morning after the FOMC minutes confirmed that interest rates in the US would remain at record lows for some time.

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The single currency recovered some of the losses it incurred on Friday, gaining over half a cent against the greenback as risk appetite in the market strengthened.

• Rallying equities yesterday, which have been boosted by stronger commodity prices and optimism about the US corporate earnings season, also buoyed support for the euro, allowing it to briefly trade over 1.48.
• Analysts also noted that while in other nations future policy remains hazy, the single currency benefited from a clearer outlook for monetary policy in the eurozone.
• Additionally, comments from the president of the St Louis Federal Reserve that the US economy faced risks from rising inflation, stoked speculation that US interest rates might rise sooner than had been expected, but investors remained bold in their exposure to risk, continuing to sell the dollar.
• This morning, the pairing is trading relatively steadily around yesterday’s closing price, although the euro is likely to find support from a German economic sentiment survey, released today at 10:00BST.
• In the US, investors await figures on the Federal Budget Balance, however the exact time of the release is unknown.

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The euro relinquished some of its recent gains against the greenback yesterday, with investors on the defensive ahead of the ECB rate decision today.

• A broadly stronger dollar was the currency of choice yesterday as investors trimmed “riskier” positions in favour of the haven currency as equities slipped into the red, easing risk appetite.
• The dollar also benefited after a US official said raising interest rates would not derail the US economic recovery. “Even if we were to start immediately, much time would pass before incremental increases could be considered tight or even neutral policy.
• Additionally analysts noted that the greenback was being supported by speculation that the dollar’s decline may have been too fast to sustain.
• In trading this morning, the greenback has come under pressure after Australian employment data reinforced demand for higher-yielding assets.
• The ECB are widely expected to announce today at 12:45BST that interest rates in the eurozone will remain at a record low of 1.0%, though the tone of the accompanying statement is likely to reflect growing optimism over the state of economic recovery in the region.

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Speculation over an imminent rate rise in Australia sent the pound tumbling yesterday, losing 1.5% to close at 1.8146.

• The Australian dollar advanced strongly as expectations grew that the Reserve Bank of Australia would move to raise interest rates at its policy meeting.
• Forecasters were split evenly over whether the Reserve Bank of Australia would keep rates on hold in their meeting tomorrow or wait until November or December to raise rates by 0.25 basis points.
• Expectations were given a further lift as figures yesterday showed that Australian job advertisements last month rose at their fastest pace since late 2007, fuelling optimism over the country’s recovery.
• This morning, the bullish speculators were proved correct as the Reserve Bank did indeed raise the official cash rate from a 49-year low to 3.25%, up 25 basis points.
• The move makes Australia the first G20 nation to raise their rates following a prolonged period of positive economic activity, and the pair are currently hovering marginally above 1.80.

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The British currency, unable to capitalise on strong early gains, lost ground against the euro yesterday, as an easing of risk appetite wore heavily on the fragile pound.

• Initially, sterling extended Tuesday’s rebound following a surprising jump in UK consumer sentiment, posting its biggest monthly boost in more than 14 years and signalling growing optimism about the UK economy.
• Additionally, the pound found support from signals that the Bank of England may not cut its bank reserves deposit rate anytime soon.
• In the afternoon however the pound gave up its gains, as weak US data brushed off on equity markets and sent the pound back down to a close of 1.0915.
• In trading this morning though, the single currency has slipped back on speculation that finance ministers and central bankers will discuss the euro’s strength at a G7 meeting later this week.
• Manufacturing data is due in the UK today at 09:30, with forecasts predicting a return to expansion in the industry, which may offer the pound some support.

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The US Federal Reserve yesterday upgraded its assessment of the U.S. economy, saying growth had returned after a deep recession. As expected, the Fed kept its target for its federal funds rate set at a range of zero to 0.25%. The previously weakened Dollar had been propping up commodity prices. Following the US Crude Oil Inventory report yesterday, oil prices dropped nearly 4% to below $68.50 a barrel. The Fed statement, which pushed the US Dollar up, only helped extend these decreases in oil prices.

USD – Dollar Optimism High Following Fed Statements

The Dollar rallied yesterday against most of its major counterparts amid concern that the Federal Reserve is nearing the end of its efforts to lift the economy out of recession. The Dollar has been sold-off recently partially due to growing optimism about the outlook for the U.S. economy. The USD finished yesterday’s trading session 100 pips higher against the EUR at the1.4700 level.

The Federal Reserve yesterday upgraded its assessment of the U.S. economy, saying growth had returned after a deep recession. As expected, the Fed kept its target for its federal funds rate set at a range of zero to 0.25%. The Fed repeated that it continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

The Fed also said it would slow its purchases of mortgage debt to extend that program’s life until the end of March, in a move toward withdrawing the central bank’s extraordinary support for the economy and markets during the contraction. Analysts had expected the move, which smoothes out the purchases.

Looking ahead to today, the most important economic indicators scheduled to be released from the U.S. are the Unemployment Claims and Existing Home Sales at 12:30 GMT and 14:00 GMT respectively. Traders will be paying close attention to today’s announcement as a stronger than expected result may continue to boost the USD in the short-term. Traders are also advised to follow FOMC member Evan’s speech at around 14:30 GMT. This speech is very important as it is likely to impact the Dollar’s volatility. Traders are advised to watch closely, as this is likely to set the pace of the Dollar’s movements going into the rest of the week’s trading.

EUR – EUR Declines as Stock Market Falls

The EUR fell to session lows against the U.S. Dollar yesterday, weighed down by declines in stocks following early gains. This came after the Federal Reserve signaled that interest rates will remain low for some time. By yesterday’s close, the EUR had fallen against the USD, pushing the oft-traded currency pair to 1.4700. The EUR experienced similar behavior against the GBP and closed at 0.9000.

Europe’s manufacturing and service industries expanded for a second month in September, suggesting that the Euro-Zone regional economy is gathering strength and showing signs of emerging from its worst recession in more than six decades after governments stepped up stimulus measures and the European Central Bank (ECB) injected billions of euros into markets.

In addition, European economic confidence rose to a 10-month high in August but rising unemployment is a reason to remain prudent about the economic outlook.

Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not common place and present terrific opportunities to take advantage of the price swings for large profitable gains.

JPY – Yen Trading Down against Currency Rivals

The Japanese Yen saw a bearish trading session yesterday, losing ground against most of its currency crosses. The JPY fell against the USD after several days of recovery, while the GBP/JPY cross also rose to around 149.40. The only economic events out of Japan yesterday were the trade balance figures; only slightly changed from forecasts as volatility was kept to a minimum.

Japan’s exports fell in August for an 11th consecutive month as recovery struggled to gain traction in the island economy. Bank of Japan Governor Shirakawa said last week that he is concerned the recovery may not outlast the worldwide stimulus packages that boosted demand for the country’s cars and electronics. The central bank cited exports as the main reason for raising its assessment of the economy last week, as record unemployment and slumping wages weaken consumer spending.

Another headwind for Japanese exporters is an appreciating currency. The yen has gained more than 7% against the Dollar in the past six months, threatening to erode companies’ profits earned abroad.

Crude Oil – Oil Drops as Inventory Rises; Demand Concern?

Oil prices dropped nearly 4% to below $68.50 a barrel during yesterday’s trading session. This drop came after a U.S. government report showed Crude Oil inventories rose more than expected, rekindling worries that energy demand in the world’s biggest consumer will be slow to recover in the wake of the recession.

The International Energy Agency (IEA) said that the inventories rose to 2.8 million barrels in the week September 18, against analysts’ expectations of a 1.5 million barrel decline.

A weak Dollar had been propping up prices recently. The greenback was narrowly mixed against the JPY, EUR and GBP on Wednesday. Oil, like other commodities, is priced in dollars so when the U.S. currency weakens, commodities become cheaper for investors holding other currencies.

As for today, traders should pay attention to the U.S Unemployment Claims report as it has tended to have an impact on Crude Oil’s prices recently, especially in the short-term.

Article Source – USD Up on Fed Statements; Oil Sinks on Demand Concerns

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