Wednesday, 12 May 2010

Major Currencies Flat After a Volatile Day

The major pairs were almost flat during NY trading hours. The EUR traded much higher against the U.S. Dollar after Spain issued a public spending cut, but failed to sustain its gains. The EUR/USD pair is currently trading at 1.2647, almost unchanged compared to the day's opening. Even the pound received a serious boost earlier today reaching as high as 1.5044 against the greenback, but eventually lost most of its rally and is currently trading at $1.4865.

The Pound was supported mainly by the end of the uncertainty around the recent elections. The rally ended after BOE Governor Mervyn King claimed in his speech that the UK's continued economic growth is at risk.

Positive news came from Germany's GDP earlier today. German Preliminary GDP came higher than expected. Usually this figure would support the EUR, but investors gave more attention to the troubled European countries rather than Germany's economic strength. Less positive news came from the U.S., signaling a growing deficit after the trade balance came in less than expected. With such a figure, it is surprising to see the USD/JPY moving above 93, this might be an opportunity to sell the pair.

The Yen is also lower against the pound and the Euro. The weakness of the Yen against its major counterparts is probably due to traders closing recent profits, when the Japanese yen was considered a safe-haven and rose sharply.

Gold continued its rally with no signs of stopping so far, and is currently trading at $1244.75 an ounce as traders continue to switch from currencies to Gold. However, it seems that risk in the market is decreasing and consequently we might see gold prices retreating from their current highs in the next few days. Crude Oil is holding above $75 a barrel, and this has turned out to be a strong support level, signaling crude oil's price-retreat may be over for now.