Friday, 24 Sep 2010

Forex Update: Surprisingly Optimistic Reports Boost Risk Appetite

The US dollar reversed gains seen yesterday after economic news from the US brought risk appetite back into the market. In a report from the US Commerce Department, new orders for durable goods dropped 1.3% in August, lower than the 0.4% gain forecasted by analysts. But core durable goods orders rose 2.0% in August.

In Europe, the euro strengthened vs. the dollar and pound, buoyed by positive economic news from Germany and France. The German Ifo Business Climate report unexpectedly rose in September to its highest mark since June 2007. The positive uptick in the German Ifo suggests that concerns of a double-dip recession should subside.

The Canadian dollar (CAD) strengthened against the US dollar after positive housing starts in the US. The loonie strength can also be attributed to gold prices hitting record highs.

The Australian and New Zealand dollars also jumped against the greenback and yen on today amid speculation that Tokyo had intervened. The Aussie was up 1.3% on the greenback as speculation continued to swirl that the Reserve Bank of Australia will raise interest rates as early as next month.