By Russell Glaser – The dollar was stronger at lunchtime during the European trading session as the euro stumbled following renewed concerns over Greece and Ireland’s fiscal troubles. Canadian housing data is due out this afternoon and the USD/CAD shows a setup to short the pair.
Following a better than expected US Non-Farm Payrolls report last week, the dollar continues to strengthen. Japanese traders bought the dollar from the opening bell and the buying continued into the European trading session.
Signs of fiscal difficulty are reemerging in Europe and have driven the euro lower today. Rising costs to insure the debt of Ireland have sparked worries that Ireland may be the next nation to activate the European mechanism for nations that cannot meet their bond payments.
The drop in the dollar comes despite a bright spot in Greece as voters there reaffirmed their support for the socialist ruling party and at the same time affirmed their support for the government’s strict austerity measures. This should end the possibility of new elections in Greece and allow for the implementation of the tough austerity measures that Greece will undertake to shed its budget deficit.
At lunchtime in the European session the EUR/USD is trading lower near the 1.39 level, after opening the day at 1.4031. The USD/CHF is up at 0.9680, following an opening day price of 0.9610. The EUR/CHF is trading at 1.3450, down from its opening price of 1.3485.
The economic calendar is sparse for the US trading session with only Canadian housing starts set to be released. The USD/CAD is trading up at 1.0035, but better than expected data from Canada may reverse the price appreciation from today and send the pair lower in line with the long term trend. An opportunity to enter short on the pair may present itself as the pair has risen but failed to break the minor trend line that begins at the end of October. Traders may want to target the mid October low of 0.9980 while placing a protective stop above the trend line should the pair continue to appreciate today.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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