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Tuesday, 14 Sep 2010
USD/JPY Hits New 15-year Low
The U.S. dollar fell to a fresh 15-year low against the Japanese yen ahead of a big leadership election in Japan. The greenback also sank against the euro during Tuesday's trading.
USD - Dollar Falls Ahead of Japan Leadership Vote
The U.S. currency was near a 1-month low against a basket of currencies after suffering its steepest fall against the euro in two months as rising investor risk appetite helped the European currency.
The dollar fell to a 9-month low against the Swiss franc on Tuesday as market players scaled back investments in risk currencies and poured funds into low-yielding currencies such as the yen and the franc. The dollar fell 0.2% to 1.0050 franc, its lowest since December of last year.
The greenback traded broadly flat against the euro on Tuesday, at $1.2870, after losing more than 1% against the common currency on Monday. The dollar touched 83.23 yen, the lowest level in 15 years, but later recovered slightly to 83.43, but still down from 83.66 in late trading on Monday. The move came ahead of an election to decide the leader of the Democratic Party of Japan, with the winner widely expected to serve as the nation's prime minister. Analysts said that dollar-yen pair may firm and could strengthen toward 85 should Japan's political situation stabilize.
EUR - Euro Gains on Risk-Asset Demand
The euro rose the most in 10 weeks against the U.S. dollar after regulators gave European banks more time than analysts expected to meet new capital requirements. The euro also strengthened after the European Commission said the region's economy may grow almost twice as fast this year as previously forecasted. Against the Japanese yen however, the euro lost ground, hitting 107.42, down from 107.63 Monday.
The euro strengthened 1.6% against the dollar to $1.2878. It climbed earlier as much as 1.7% to $1.2893 in the biggest intraday gain since July 1. The euro rebounded 12% from a four-year low on June 7 through Aug. 6 as investors focused on worse-than-forecasted U.S. economic data as European statistics surpassed predictions. Still, the euro may be unable to sustain its gains against the dollar as renewed concern over the solvency of nations from Portugal to Ireland points to another slump for the common European currency.
JPY - Yen Extends Gains Versus Dollar Before Election
The yen rose to a 15-year high on Tuesday ahead of a decisive vote in Japan, weighing on Japanese equities and leaving traders wondering whether a rally that has lifted global stock markets to their highest levels in a month can be sustained.
The yen rallied versus the dollar on speculation Prime Minister Naoto Kan will beat his rival Ichiro Ozawa in a party vote today; reducing the likelihood the government will intervene to weaken the currency. Japan's currency also strengthened against all the major currencies as the Japanese stocks dropped, boosting demand for safer assets.
OIL - Oil Rises on Improved Global Economic Outlook
Crude Oil closed above $77 a barrel Monday after upbeat data from China stoked optimism about the global economy, while the closure of a pipeline in the Midwest disrupted supplies to refineries in the region. Oil traders were cheered by increasing industrial production in China, which over the weekend reported manufacturing gains of nearly 14% in August from a year ago, with the data signaling the world's second-biggest economy is growing.
Crude prices earlier reached an intraday high of $78.07 a barrel, the first time a front-month contract breached the $78 mark since Aug. 11. On Friday, Oil gained $2.20 to end at $76.45 a barrel, closing the week higher by 2.5%. A softer U.S. dollar also supported the dollar-denominated commodity by making it less costly for holders of other currencies.
The pair has been rising constantly since the beginning of the week and is currently trading around the 1.2870 level. As the MACD on the 4-hour chart continues to point up, the pair could rise further, with potential to reach the 1.2950 level.
The pair failed to breach the 1.5500 level yesterday, and as a result saw a sharp fall which took it as low as the 1.5365 level. The bearish move might continue today, with a key-target level of 1.5300.
The bearish trend continues with full steam as the USD/JPY has reached a 15-year low on yesterday's trading. The RSI on the weekly chart remains within the over-sold section, suggesting that the pair might drop even further. Going short might be preferable today.
Ever since peaking at the 1.275 level, the pair is dropping with no apparent stops. The MACD and the RSI on the 4-hour chart continue to point down, indicating that the bearish move has more room to go. Going short might be a good strategy today.
The Wild Card
A swift rise in the price of spot crude oil by $5 may have left the commodity oversold. A bearish cross has formed on the daily chart's Slow Stochastic oscillator, indicating that the price may fall in the near term. Another sign supporting an end to the price rally is the doji candlestick from yesterday's trading. The price climbed to a high of $77, a previous resistance level from early February. CFD traders may want to liquidate any long positions they may have in spot crude oil. Support is found at $75.60.
|13:00||EUR||GfK German Consumer Climate||8.5||8.6||-|
|00:30||JPY||Tokyo Core CPI||y/y||2.5%||2.3%||-|
|00:30||JPY||National Core CPI||y/y||3.0%||2.9%||-|
|00:50||JPY||Prelim Industrial Production||m/m||2.9%||-0.4%||-|
|01:00||NZD||ANZ Business Confidence||26.5||-||-|
|01:05||GBP||GfK Consumer Confidence||-2||-1||-|
|01:30||AUD||Private Sector Credit||m/m||0.5%||0.5%||-|
|08:00||EUR||German Retail Sales||m/m||-3.2%||1.7%||-|
|08:45||EUR||French Consumer Spending||m/m||-0.8%||0.2%||-|
|09:00||CHF||KOF Economic Barometer||99.8||100.1||-|
|10:00||EUR||Italian Monthly Unemployment Rate||12.6%||12.6%||-|
|10:00||EUR||Italian Quarterly Unemployment Rate||12.5%||12.4%||-|
|11:00||EUR||CPI Flash Estimate||y/y||0.4%||0.3%||-|