Wednesday, 19 Jan 2011

Dollar Continues to Slide Across the Board

Risky assets were shunned during the New York trading session as the euro failed to hold onto most of its gains today. Equity markets were off their highs following disappointing 4th quarter earnings by Goldman Sachs.

US markets opened on a strong note with the release of better than expected US building permits that rose by 0.64 Mn last month on forecasts of only 0.56 Mn. However, the rosy picture faded quickly following the release of poor earnings results by Goldman Sachs. Equity markets sank as risk sentiment quickly faded and the euro lost most of its gains versus the dollar and the Swiss franc.

At the end of the US trading session, the EUR/USD was up on the day at 1.3470 after opening the day at 1.3445. At one point the pair was trading above 1.3500. The GBP/USD was down for the first time in 9 trading sessions at 1.5990 from 1.6007. The franc was up on the dollar with the USD/CHF down at 0.9550. The EUR/CHF was down at 1.2685 from 1.2906. Equity markets sank with the S&P 500 trading lower by 1%.

Tomorrow will be filled with economic data releases. First off, China is set to release GDP numbers for the 4th quarter and the yearly total. Yearly Chinese CPI was leaked to the media earlier which came in at 4.6%, near the upper level of economists' forecasts. Also due out tomorrow are US weekly unemployment data as well as the Philly Fed Manufacturing Index.

Strong data from the US may help to stop the recent losses in the dollar as the greenback continues to weaken versus the majors. EUR/USD Support and resistance come in at 1.3250 and 1.3540.