InvestMacro FX

By GCI Fx Research

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The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.2815 level and was supported around the $1.2615 level.  Yesterday’s strong gains in U.S. equity markets coincided with a bid in the common currency and news that Citigroup’s January and February were profitable.  A report from U.S. Treasury Secretary Geithner that he plans to inject capital to help lenders reduce their exposures to distressed securities also impacted the market.  Traders remain curious as to whether Citigroup and any other U.S. financial institutions will be nationalized by the Obama administration and whether or not the Fed’s new asset purchase facilities ease credit strains.  Federal Reserve Chairman Bernanke yesterday reiterated that major financial institutions will not be permitted to fail and said a sustainable economic recovery will “remain out of reach” until the banking sector is stabilized.”  He added 2010 will be a year of growth if the current measures being taken to support the economy result in the recession ending later this year.  In eurozone news, German January factory orders were off 8% m/m and 37.9% y/y while the German January producer price index was off 1.2% m/m and up 2.0% y/y. Euro bids are cited around the US$ 1.2385 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥97.20 level and was capped around the ¥98.85 level.  Data released in Japan overnight saw January core machinery orders off 3.2% m/m while the February domestic corporate goods price index was off 0.4% m/m and 1.1% y/y, the latest indication that deflationary pressures have not yet subsided.  The yen was stronger across the board today as traders weighed the ongoing global economic problems against, yesterday’s strong gains in U.S. equity markets, and Japan’s slumping economy.  Most traders expect Bank of Japan will expand its purchase of assets to keep market rates of interest restrained.  The Nikkei 225 stock index climbed 4.55% to close at ¥7,376.12.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥124.10 level and was capped around the ¥125.70 level.  The British pound moved lower vis-à-vis the yen as sterling tested offers around the ¥133.90 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥83.90 level.  The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8399 in the over-the-counter market, down from CNY 6.8410.  Data released in China today saw February urban property sales up 6.9% y/y.

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The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.3840 level and was supported around the $1.3655 level.  Bank of England purchased ₤2 billion in gilts today as the first part of its quantitative easing strategy that was announced last week.  BoE is likely to purchase up to ₤75 billion in gilts and corporate debt over the next three months and this effectively means money is being printed.  Prime Minister Brown will meet banking chief executives on 24 March ahead of the G20 summit it London on 2 April.  Data released in the U.K. today saw the January trade deficit worsen to -₤7.7 billion from -₤7.2 billion in December.  Cable bids are cited around the US$ 1.3470 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.9300 figure and was supported around the ₤0.9190 level.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

The Reserve Bank of New Zealand decided to reduce its interest rate by 50 basis points today according to a government release. The rate reduction brought the official cash rate from 3.50 percent to a new record low 3.00 percent. Today’s bank decision follows previous reductions by 150 basis points in each of December and January as the RBZN has slashed rates by 525 basis points since the middle of last year in response to the global economic crisis.

New Zealand’s economy activity has been hit hard with contracting economic growth since the beginning of 2008. The NZ gross domestic product declined by 0.3 percent in the first quarter of 2008, 0.2 percent in the second quarter and by 0.4 percent in the third quarter.

The RBNZ cash rate is now at its lowest standing since the bank adopted its official cash rate policy in 1999. New Zealand’s rate is also lower than Australia’s 3.25 percent cash rate following today’s news and Australia’s decision to hold its rate steady last week.

Reserve Bank Governor Alan Bollard commented in the release on the New Zealand saying, “the impact of difficult trading conditions is showing through clearly in reduced export revenues, weak business sentiment, and sharply curtailed investment and employment. Further house price falls and increased precautionary saving by households are driving a weakness in spending. Inflation pressure is abating rapidly as a result.”

Bollard said that the global economy “deteriorated very rapidly late last year” and that “While monetary and fiscal policy responses in many countries have been substantial we still expect the adverse economic forces generated by the crisis to remain dominant throughout 2009. The timing and extent of global recovery remain highly uncertain.”

Bollard also stated that more rate cuts to come should be smaller than the last few reductions but he does not see New Zealand adopting a zero interest rate policy because, “New Zealand needs to retain competitiveness in the international capital markets.” You can read the full bank statement here.

New Zealand kiwi dollar ascends higher in Forex Trading.

The New Zealand dollar gained in Forex Trading after the interest rate news was released.  The NZ kiwi spiked higher against the US dollar as the NZD/USD trades at 0.5127 at 5:25m EST after opening the day at the 0.5000 exchange rate.  The Australian dollar lost ground to the New Zealand kiwi as the AUD/NZD has fallen all the way down to trading at 1.2685 after opening the day at 1.2855.

The euro also fell substantially versus the kiwi as the EUR/NZD trades at 2.5037 from the 2.5334 opening today. Against the Japanese yen, the kiwi climbed from its 49.28 opening to trading later at 49.80 yen per kiwi.

NZD/USD Chart – The New Zealand dollar spiking higher versus the US dollar after the RBNZ cut interest rates by 50 basis points to 3.00 percent.

By Donald Ogilve

Trading the Forex Markets can be very lucrative. It can also be an easy way to lose all your money. It all depends on your approach. It doesn’t necessarily require you to go through an extensive research and study program for months. You will, however, need to invest some time and effort to digest all the information required to do well at it. Provided you trade wisely and cautiously, you can become a Forex expert within a year or so, making consistent substantial profits from it. So, where do you start? Well, at the beginning, of course.

Get a decent Internet connection

It may seem silly to have to mention this but, at least in my experience, a slow or dodgy internet connection can cost you…a lot. Part of what has made Forex Trading so accessible to regular folks is availability of high quality free software and market information. There’s a wide array of sources of information, most over the internet, so the importance of the internet is obvious.

The main reason why the quality of the internet connection comes up, aside from speedy delivery of information, is software trade execution. I once entered a trade impulsively – this is a big no-no, and this example underscores why – and, shortly afterwards, realized my mistake. I knew I needed to get out immediately. I attempted to do so but my Wireless internet connection went off at that point. I had lost a substantial amount of money by the time I got my connection back. I blamed karma. Fate was obviously after me. In truth, it was because of my unreliable internet connection. All it takes is one case such as this to destroy your trading Account. If you are going to trade seriously, get a good broadband service.

Research & planning

The second phase of Forex trading has four sub-steps: research, research, research and planning. One just cannot put too much emphasis on the importance of research in Forex trading. Read a book, or three. Get some background on world markets and how they affect each other. Remember that the Forex Market is influenced by a lot of external factors. You will need to understand correlations to maximize your profits. There is some free information available, so you don’t necessarily have to spend money. However, be wary of e-books that try to sell you systems. Get your own knowledge first…unless of course you can try them risk-free.

Along with research, formulate a feasible plan about how you will conduct your trading. If possible, write it down and treat it like a business plan. It should serve as your blueprint for trading. Think about how much you are going to invest. Also write down your short-term and long-term goals and how much loss you can afford. Your strategy will depend on this information so try to be clear and precise.

Find a broker

Your next step is to find a brokerage firm through whom you will buy and sell currencies. You need to be thorough while checking out brokers. Regulation in the Forex Market is no where near the level of other markets. There are still a number of unscrupulous firms out there that might try to defraud you. Try to find a firm that has ties with an international bank or any other financial institution. You should also check if the firm is registered with Commodity Futures Trading Commission, the US government institution that regulates fraudulent trading practices.

Along with the above, you will also want to confirm that the broker is a good fit for you. How good is their software? Do they allow you trade and view charts via website, in case you are unable to get to your own computer? Do they have a mobile application? Make sure you have all these answers. Ultimately, if you are unhappy with one, you can change to another one.

Set up a demo account and trade

All brokers should now offer demo trading accounts. These will allow you trade “fake” money against real-life conditions. Open one and trade, trade, trade! Test out your strategies for at least a few months on a demo account before going live. You will learn a lot about yourself and what you are comfortable with as a trader this way.

Once you have gone through this, you will be ready to begin your Forex Trading journey proper.

About the Author

Donald Ogilve is a Part-Time Forex Trader. To learn more about making money Forex Trading an hour a day visit Donald Ogilve’s Blog at ForexInitiate.com.

Two potential long term breakouts are emerging in the most unlikely spots…the yen carry trade: EUR/JPY and NZD/JPY

Everyone has been used to yen strength this year and everyone has been accustomed to the idea of the “carry trade” selling off for even longer.

So if this breakout occurs in the upcoming days to weeks as I suspect it will, it will catch many traders off guard. There are still a ton of traders “short” on this trade that will be caught on the wrong side of the trade and will have to reverse their positions.

Also, there will be many former “carry traders” that have given up on the concept and will have written it off by now as a strategy. It’s about that time when these new, fresh breakouts occur.

Click on the EUR/JPY chart below and you’ll see what I’m looking at. If 126 is decisively cleared then the pair could move to the 130 level fairly easily.

The NZD/JPY looks the same way. Click on it below to enlarge it. If it clears 50 solidly, then we could see 55 hit pretty easily. Remember, these aren’t day trades. These are trades that could break out in the upcoming days to weeks. When they do, the trades would last probably for days to maybe a week or two. So we’re talking longer term trades but with a higher number of pips to potentially be gained.

Sean Hyman

www.forextradingblog.com

Invest in the Recession Proof Market: Forex

A couple of days a week it seems like there are low momtenum days in the market. Today appears to be one of those days. 

If you’re a swing trader or a long term carry trader, then this would not matter.

However, if you are into short term trades, then you need momentum type moves NOW and not days from now. There’s not one major currency pair up or down even 1% today. So to me, that constitutes a lack of momentum for the day unless that suddenly picks up.

For the short term trader, momentum (strong, quick trending moves) are your friend…and a lack of momentum (creeping trends or dull ranges) can be your enemy.

With that said, EUR/CAD and EUR/USD are the top movers on the day today so far. If EUR/CAD broke 1.6360, then there is a chance that the momentum could increase. If EUR/USD were to break and hold above 1.2820, then the same could happen for it.

However, it’s on days like these when I find that if I “lay low” and don’t trade, that I keep gains from previous days. Then I can look to another, more favorable day that would bring back the high probability trades.

To get started in this market, download a FREE demo trading station from this link: http://www.forextradingblog.com/practice-trading/ or by clicking on the “practice account” tab at the top of this page. 

Sean Hyman

www.mywealth.com

www.forextradingblog.com

Source: ForexYard

With few economic indicators expected to be released today, all eyes have turned to the Reserve Bank of New Zealand (RBNZ) as it positions itself to cut short-term interest rates by an expected 50 basis points. New Zealand currently maintains one of the highest global interest rates, but with the global recession cutting deeper into every major economy, the gap between the different interest rates is steadily being reduced, further weakening each nation’s currency.

Economic News

USD – USD Volatility to Heighten from Today’s Market Anxiety

The Dollar was little changed against most of its major counterparts during yesterday’s trading session. Traders awaited Federal Reserve Board Chairman Bernanke’s speech yesterday in which he urged a sweeping overhaul of U.S. financial regulations in an effort to smooth out the boom-and-bust cycles in financial markets. The USD began to stabilize as a result, ending yesterday at 1.2693 against the EUR and 1.3767 against the GBP.

Bernanke recommended that lawmakers and supervisors rethink everything from the amounts firms set aside against potential trading losses and deposit-insurance fees to protections for money-market funds. His remarks reflected a judgment that the U.S., just like emerging-market nations in the past, failed to properly manage a flood of capital over the past decade and a half.

Optimism in global markets was fueled by a memo from Citigroup’s Chief Executive which said the troubled banking giant was profitable in the first two months of 2009 and he is confident about its capital strength after tough internal stress tests. The investors took the comments as a sign of improvement for the overall economy.

As for today, a few data releases are expected from the U.S. economy. These figures are expected to set the tone for the USD’s pairs and crosses. Special attention should be given to the Crude Oil Inventory report which is expected to increase from its previous reading, signaling growth expectations in the largest energy consumer. Traders pay close attention to this figure as it has a moderate correlation with the value of the U.S. Dollar. Also today, the Federal Budget Balance is scheduled and should also have an impact on the market because if it delivers unfavorable figures it will validate a problematic U.S. market, and the USD is likely to weaken as a result.

EUR – Will the EUR Remain Bullish Today?

After a relatively negative news day, the EUR still managed to appreciate against most of its currency counterparts. The EUR gained about 100 points versus the Swiss Franc and closed at 1.4738. Against the USD and the JPY it mainly fluctuated within a small range.

The major economic event that came out of the Euro-Zone yesterday was the German Trade Balance, which was slightly lower than analysts had forecast. Exports from Germany dropped for a 4th consecutive month in January, pushing Europe’s largest economy deeper into economic despair. Germany is battling its worst recession in more than 60 years as a global economic slump curbs exports, prompting companies to scale back output and eliminate jobs. The German economy has shrunk 2.1% this year alone, the most in more than 20 years, also marking the 3rd consecutive quarterly drop.

Looking ahead to today, the most important financial indicator scheduled to be released from Europe is the British Trade Balance. Analysts are forecasting this figure to increase from its previous reading. Traders will be paying close attention to today’s announcement as a stronger than expected result may continue to bolster the EUR in the short-term.

JPY – JPY Holds Recent Strength; Japanese Economy Continues to Sinks

The JPY saw bullish results against most of its major currency rivals. The JPY has predominantly been influenced by the other major currencies’ behavior lately, as only one major indicator was published from Japan. The JPY ended yesterday’s trading up at 98.53 against the USD, and has continued to hold these gains through today’s early trading hours.

Core Japanese private-sector machinery orders fell for a 4th consecutive month in January, the longest losing streak in at least 20 years, as exports crashed and profits evaporated. Japan posted its first current-account deficit in 13 years in January, leaving companies with less cash to invest in plant and equipment. Companies’ project profits will slide 86% this fiscal year, and exporters will bear the brunt of the decline.

Sentiment among Japan’s largest manufacturers fell significantly in the last year, signaling that companies are likely to cancel spending plans and cut more jobs, pushing the economy further into recession and weakening the JPY.

Oil – OPEC Production Cut Expected Next Week

Crude Oil fell again yesterday, after an early jump above $48 a barrel, as the market anticipated OPEC’s meeting on March 15th in Vienna. If OPEC decides to make another cut to oil production, prices are expected to firm up and move higher in a short-term.

Looking ahead today, one of the more influential pieces of economic data will be the U.S. Crude Oil Inventories report. This inventories report has become more and more relevant over the last few months as the movement of the price of Crude Oil has become a major market mover. Expectations show a rise of 0.1M barrels from last month’s decrease of 0.7M barrels. Traders can, and should, expect wide market volatility around the 14:30 GMT release of these inventories figures because of Crude Oil’s importance in today’s market.

Technical News

EUR/USD

This pair appears to be leveling off as all oscillators are giving off neutral signals. However, the Bollinger Bands on the 4-hour and daily charts are beginning to tighten, indicating a volatile price move may occur in the near future. With the recent trend, and momentum, pointing in an upward direction, the volatile movement may be upward. Going long with tight stops might be a wise choice today.

GBP/USD

This pair’s recent drop in value continues to hold the price in the over-sold territory on the RSI of the 4-hour and daily charts, signaling upward pressure. While the momentum appears to remain downward, we may likely see a number of upward corrections throughout the day. Buying on the lows and selling on the highs of these fluctuations will be a good strategy today.

USD/JPY

The sustained upward movement of this pair has begun to push the long-term oscillators, such as the daily chart’s RSI, into the over-bought territory. This appears to be putting downward pressure on the price of this pair as it has begun to level off. As momentum shifts into a downward posture, going short with tight stops might be a good strategy.

USD/CHF

The price of this pair is floating near the upper border of the Bollinger Bands on the hourly and 4-hour charts, signaling moderate downward pressure. With the price currently floating in the over-bought territory on the hourly chart’s RSI, the notion of a downward correction appears to be getting stronger. Going short with tight stops might be a wise choice today.

The Wild Card – Gold

The price of this commodity has entered the over-sold territory on the RSI of both the 4-hour and daily charts, signaling an upward correction may be imminent. The recent drop in price has fallen within the range of the up-trend which goes back to October of last year and has now reached the lower limit of that range. The bullish cross on the 4-hour chart’s Slow Stochastic supports the notion that an upward swing may occur in the near future. Forex traders have a great opportunity to either enter the bullish reversal after the swing occurs, or wait for the trend to be breached and go short to ride out the downward slide which may occur shortly thereafter.

Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By Rick Goldfeller

In school, they do a great job at teaching you on how to become an employee. In the process, they feed you lots of info regarding subject matters that don’t count for crap when it comes to landing a job – do you actually think that making a poem for your boss will get you in? Maybe, if you were applying for some non-profit organization rendering non-profit services. Anyways my point is that they feed you a plenty of rubbish. The same goes for currency trading courses. Lots of people wanting to make it big with currency exchange, but have no prior knowledge or experience as to how things work there, opt to educate themselves through currency trading courses.

But again the same “flaw” happening with the education system today (since way back then), is happening to these very courses. There’s a legion of them teaching their “students” about the history of foreign exchange, a little too much than they should practical theories they should know. A good currency trading course should be able to give their consumers strategies that they can use right then and now, when they get down to actually making it in the market. Showing them how to make practical decisions rather than experimenting with ideas that will most likely fail or get them bitten in the behind real bad.

That’s what drives people everywhere to this type of business in the first place – practicality. Moving forward, a currency trading course has to be able to stimulate the “creative guy” sleeping within you. True that it must show you a number ideas and solutions to problems, but it has got to be able to energize your creativity, as to coming up with better ideas and solutions on your own. Being totally dependent on a “guide” is a bad thing, the best thing that you can do for yourself, to ensure your survival in the foreign market exchange, is to become independent.

Coming up with a set of theories of your own on how to be successful is important. The currency trading course should also be capable of making you confident, in the sense that you don’t have any hesitations or fears, and believe in the decisions you make. In some sense, they are required to give you the “balls” you need, that’ll lead you into the right direction. By reading the “guide”, the confidence you need should be eventually embedded into your “soul” scan through it. Lastly, a currency trading guide must be capable of preparing you for the actual environment that you’ll be working in.

You can memorize the entire book front to back, but it doesn’t count for horse crap if you don’t actually apply it. Not doing so can have negative effects on the students, such as being overwhelmed by how fast things are moving, which leads them with a feeling of getting left behind. That’s a terrible feeling, to feel that everybody is doing a better job and making more money than you is something you don’t wanna experience. To avoid this from happening to you, and to make it achieve financial freedom, find a currency trading course that teaches you all that’s needed to know, not one giving you a history lessons.

About the Author

The author of this article Rick Goldfeller is an underground Financial Analyst who has been successfully running campaigns for several wealthy clients. Rick finally decided to go public and share his knowledge and experience through his website http://www.finanzine.com. You can sign up for his free newsletter and join his coaching program.

By Donald Ogilve

Trading in the market does not happen in a vacuum. This mantra applies to all investment markets; the usual suspects like stocks and commodities, but also Forex. There are a variety of events in any given environment that could affect the values items in any of these markets. The phenomenom we are looking at here though has to do with the effects the markets have on each other. Understanding these correlations will help you be more profitable at Forex Trading.

Big Investment people always talk about diversifying your portfolio. The idea is not to put all your eggs in one basket so you can keep going in case on thing doesn’t work out so well. You also hear about hedging. It’s an interesting strategy that involves taking a position in one market that is opposite to one taken in another market to offset any exposure to major risk…in a nutshell. One might look at this and work out that the net result would be zero, but savvy investors obviously expect to get out of the losing position quickly, and stay in the winning position for longer.

All of the above can be applied to the Currency Trading Market. I personally do not have an Account that allows me to invest in stocks or oil, but I can apply the trades I might have made in either of these markets to my Forex Trading. A simple example is the correlation between commodities and Australian Dollar, New Zealand Dollar and the Canadian Dollar. The the case of the Canadian Dollar, rising Oil prices help to increase it’s value against the dollar. This occurs because Canada is one of the World’s largest producers of Oil. It is also the largest supplier of Oil to it’s more popular neighbor, America. When Oil is on the rise, it is good for Canada, as much of Canada’s Economy depends on it. On the other hand, rising Oil prices are not so good for the US, also because much of the US Economy depends on it. Expensive Oil therefore tends to have a negative effect on US Equities. The end result is, you can trade the US Dollar/Canadian Dollar currency pair armed with this information.

One can extend this to other currency pairs. You can do some mixing and matching as well. Rising Gold tends to be good for the Australian Dollar and bad for the US Dollar, so one can buy the Australian Currency against the Dollar under such circumstances. Also, when US Equities are doing well, the Dollar tends to gain on the Japanese Yen because people would sell the Yen for Dollars so they can buy US Based Assets which offer a high rate of Interest than Japan.

The thing to note here is that this correlation is not absolute. There are times when it just won’t hold, when more important factors are at work, such as in a time of Economic strife when predictability in the markets reduces and everyone is afraid. These correlations will often reverse at a moments notice without much warning. This was the case in January 2009, when Gold and the Dollar began to move up at the same time. Some fundamentalists claim that there is no basis for the correlation between the dollar and Gold, for instance. Still, correlations like this can be quite useful. As a Forex Trader, you have to make use of all tools that come your way. I think there are times when it is best to go with the established trends. Like any other situation, the trader has to be constantly vigilant and pay attention to the surroundings. As long as you manage your risks accordingly, you will be able to stay in good shape, regardless of what happens.

About the Author

Donald Ogilve is a Part-Time Forex Trader. To learn more about making money Forex Trading an hour a day visit Donald Ogilve’s Blog at ForexInitiate.com.

The US Dollar has been mixed in forex trading versus the other major currencies today after reversing some early losses.  The American currency has traded higher today versus the euro, Swiss franc and British pound while falling against the Japanese yen, Australian dollar, New Zealand dollar and Canadian dollar.

The dollar was weaker in the morning of the U.S. session as stocks rallied with help from news of a memo from Citigroup CEO Vikram Pandit that said the bank was profitable for the first two months of 2009.  A profitable quarter for Citigroup would be quite a turnaround after registering a loss of $8.29 billion in the fourth quarter of 2008.

Today’s stock market rally is the biggest so far this year as the Dow Jones Industrial has gained 5.02 percent and 328.47 points as of 3:37pm EST. The NASDAQ has climbed 6.13 percent and 78.77 points while the S&P 500 has advanced 5.69 percent and 38.85 points to level at 715.38.

The US dollar reversed early losses versus the Swiss franc to trade higher as the USD/CHF trades at the exchange rate of 1.1634 at 3:43pm EST according to currency data from Oanda.  The USD/CHF opened the day trading at 1.1550 and reached an intraday low of 1.1432 before turning around.

The euro has fallen versus the dollar after the EUR/USD opened at 1.2676 today to trading at 1.2654.  The EUR/USD managed to reach an intraday high of 1.2822 earlier today.  The British pound has also declined versus the dollar as the GBP/USD fell from its 1.3846 opening to trade at 1.3738 later today.

The Australian dollar rocketed higher versus the dollar today before giving back some of its gains but is still higher for the day versus the American currency. The AUD/USD trades at 0.6430 after opening the day at 0.6387 and made a high of 0.6489.  The New Zealand dollar followed a similar trajectory as the Aussie versus the dollar and the NZD/USD trades at 0.5016 after opening at 0.4975 and making a high of 0.5052.

The dollar has declined against the Japanese yen as the USD/JPY trades at 98.72 after opening the day at 98.97 and the dollar has also declined versus the Canadian dollar as the USD/CAD trades at 1.2855 after opening at the 1.2926 exchange rate.

By GCI Fx Research

€

The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.2820 level and was supported around the $1.2580 level.  U.S. equity markets jumped higher early in the North American session and the U.S. dollar declined.  European Central Bank member Hurley reported the central bank “will continue to monitor closely all developments” and added “the uncertainty concerning the outlook remains very high.”  Hurley also noted “I should mention that the ECB is currently studying possible nonstandard monetary policy measures.  Quantitative easing is a legitimate (monetary policy) measure.”  Most traders believe the ECB will conduct quantitative easing measures in H1 2009 but acknowledge the difficulties in trying to select assets to purchase with varying credit profiles.  European Central Bank member Bini Smaghi noted “If the (economic) situation worsens, the ECB is ready to reduce rates further, even to zero…That is above all the case if the economy was really threatened by sustained deflation. And in such a situation, the best approach would be to act sooner rather than later.”  U.K. Chancellor of the Exchequer Darling was critical of the European Union today, saying the European Union and European Central Bank should do more to aid struggling Central and Eastern European developing countries that are struggling with the several regional crisis.  Data released in the eurozone today saw the French January trade balance widen to -€4.55 billion while the German February consumer price index rose 0.6% m/m and +1.0% y/y.  In U.S. news, Federal Reserve Chairman Bernanke called for regulatory reform, noting “We must have a strategy that regulates the financial system as a whole, in a holistic way, not just its individual components.” Data released in the U.S. today saw January wholesale inventories off 0.7% m/m, up from the revised December fall of 1.5%. Euro bids are cited around the US$ 1.2385 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥97.90 level and was capped around the ¥99.15 level.  The yen was mixed across the board as risk appetite returned to some equities markets.  Central bankers have been driving home the message that many of the world’s largest financial institutions are too important to fail and spreads on credit default swaps came in overnight on that message and other developments.  European Central Bank President Trichet yesterday said policymakers are striving to mitigate systemic risk and Federal Reserve Chairman Bernanke again reiterated banks maintain sufficient capital.  Data released in Japan overnight saw the January leading index improve to 10.0 from 8.3 in December while the coincident index printed at 0.0.  Most traders expect Bank of Japan will continue to ease monetary policy through asset purchases.  The Nikkei 225 stock index lost 0.44% to close at ¥7,054.98.   U.S. dollar offers are cited around the ¥104.15 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥126.05 level and was supported around the ¥124.30 level.  The British pound moved lower vis-à-vis the yen as sterling tested offers around the ¥137.05 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥85.85 level.  The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8410 in the over-the-counter market, up from CNY 6.8398.

Daily Market Commentary provided by GCI Financial Ltd.

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