By Russell Glaser – The dollar continued to gain against rivals on the heels of the tax compromise reached by the Obama administration and Congress. The USD/JPY put in another strong performance with the pair rising above the 84 level. The Kiwi was weaker following the New Zealand interest rate announcement.
The boost in the dollar can be tied to a link in treasury yields that also rose on the back of the tax compromise. Some speculate the extension of income tax benefits may provide an extra stimulus for the US economy, allowing for the Federal Reserve to potentially reduce the amount of quantitative easing it recently announced.
In late New York trading the USD/JPY was up at 84.00, after opening the day at 83.86. The EUR/USD was up slightly on the day at 1.3260 from an opening day price of 1.3231. The AUD/USD was even at 0.9790.
As expected, the Royal Bank of New Zealand held its baseline interest rate steady at 3.00%. This sent the rate of the AUD/NZD soaring to a high of 1.3140. The pair is currently trading up at 1.3110 after opening the day at 1.3003. The AUD/NZD looks ripe for further gains as a breach of the 1.3140 level could take the pair higher to the October high of 1.3215.
Tomorrow traders will be eyeing the British interest rate announcement as well as the Asset Purchase Facility numbers. No changes are expected in either but the announcement has the ability to continue the two week recovery in the GBP/USD past the resistance level of 1.5840 towards the next resistance level which is found at 1.5950.
Forex Market Analysis provided by ForexYard.
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