The dollar fell against most major currencies on Tuesday, snapping a two day rally which was spurred on by thoughts of whether or not the US will be able to raise interest rates by the end of the year.
The decline came after the U.S. Treasury released a statement approving 10 of the country's biggest banks requests to repay the 68 billion dollars in government funds. Those funds were received as part of the Toxic Asset Relief Program (TARP) during the height of the financial crisis, several months ago. This move raised hopes that the worst could be over.
Nevertheless, investors and traders were growing sceptical that the Federal Reserve would raise rates by the end of 2009, after the Wall Street Journal published an article questioning the practicality of the Obama Government’s projected numbers.
At 10:00 PM GMT, the Dollar was trading down .95% to the Yen to 97.54, down 1.6% to the British Pound to 1.6309, down 1.4% to the Canadian Dollar to 1.0999, down 1.7% to the Australian Dollar to .8025, down 1.05% to the Kiwi to .6275 and down 1.35% to the Swiss Franc to 1.0768.
EUR
The euro traded sideways most of the session on Tuesday, after a data release showed a marked decline in German industrial output. The data suggested that the Germany, the largest economy in Europe, is still facing weak global demand for its goods.
There was a bright spot though for the Euro, after European Central Bank officials said that Latvia, which is one of the most troubled economies in Eastern Europe, may avoid devaluing its currency. There has been speculation for several weeks that Latvia might move to purposefully inflate their currency, in order to lower the real cost of their debt.
At 10:20 PM GMT, the Euro was trading up .17% to the Japanese Yen to 137.13, down .51% to the British Pound to .8613 after stronger than expected housing data came out of London, boosting the GBP, down .13% to the Canadian Dollar to 1.5489, down .47% to the Australian Dollar to 1.7527 and up .3% to the Swiss Franc to 1.5172.
Euro falls as ECB revises damage estimates. Dollar soars thanks to Russia
EUR
The Euro fell broadly on Monday, as investors concerned about continued weakness on the continent sold off the currency for a basket of others. The worries were sparked by a German industrial consortium that said the credit situation, which is still rather tight, is putting the pressure on businesses and preventing growth.
As well, the European central Bank estimated that European bank write-downs from toxic assets could total around $218 billion when all is said and done. The ECB also said that defaulted consumer loans could account for another $431 billion. The original total that the ECB estimated this past February was $366 billion.
At 10:00 PM GMT, the Euro was trading down 2.38% to the Japanese Yen to 134.67, down .75% to the British Pound Sterling, down .25% to 1.5639 against the Canadian Dollar, and up .75% to the Australian Dollar, which was suffering as a result of a drop in Oil prices, to trade at .7926.
USD
US data on Monday that showed the New York factory sector falling apart at a rapid pace in June, did nothing to hurt the Dollar. Earlier in the session, Russia, which has come out in favour of an IMF debt issue to, as it declared, diversify its Dollar positions, reaffirmed their belief in the Dollar.
This surprising gesture did more for the Dollar (and for lucky Forex Online traders), despite the bad data, and helped the currency gain broadly. The comment came during the G8 finance ministers meeting, where Russian minister Alexi Kudrin said the Dollars status is likely to unchanged in the near future.
At 10:15PM GMT, the Dollar was trading up 1.68% to the Euro to 1.3778, up .94% to the Pound to 1.6287, up 1.4% to the Canadian Dollar to 1.1337, up 2.4% to the Australian Dollar to .7928, up 2.15 to the New Zealand Dollar to .6297 and up 1.25% to the Swiss Franc to 1.0927. The Dollar fell .75% to the Japanese Yen to 97.7.
The Euro has followed the pattern of late of hitting the 1.40 mark versus the US Dollar, but then quickly backing down. With the US Federal Reserve expected to speak this week about how it will wind down its quantitive easing policy and a host of data expected from the US this week, we could see a break in that pattern if Forex online traders are not happy with the numbers or more important, the plan the fed unveils.
As you can see from the chart, the technical action continues to revolve around the 21-day moving average (represented by the blue line). To increase momentum here, the pair needs to close above the tip of that blue line (140).
To the downside, the obvious bigger focus remains the 1.3720740 support line that has been in effect since March showing how little this pair has moved even with all the volume.
USD
Risk appetite reared its head once again Friday, as the Dollar fell against the major currencies after a recent influx of positive economic data increased hopes that the recession was nearing its bottom.
Forex Traders seemed satisfied buying into the higher-yielding currencies, such as the Aussie and Kiwi Dollars, as they shed their positions in the Greenback. The jubilance came late Thursday, after a manufacturing report showed that production shrank less than expected in June, in one of the key regions in the US, and that the number of people receiving jobless benefits shrank for the first time since January.
The Dollar closed down .31% to the Japanese Yen to 96.23, down 1% to the Sterling to 1.6492, down .98% to the Australian Dollar to .8050, down .76% to the New Zealand Dollar to .6424 and down .49% to the Swiss Franc to 1.0809. The Dollar did rise .26% versus the Canadian Dollar to close the week off at 1.1351.
EUR
The European Central Bank said that European banks may face losses totaling an additional $283 Billion by 2010, a stark increase from their earlier estimates. The news caused mix results for the Euro on Friday after, a choppy session which saw the single currency bounce between positive to negative territory against most currencies, finishing the week off with a slightly down to mixed result against the majors.
The Euro closed off the volatile week up .01% to the Japanese Yen to 134.18, down .7% to the British Pound to .845, up .56% to the Canadian Dollar to 1.5826, down .74% to the Australian Dollar to 1.7294, down .24% to the Swiss Franc to 1.5071 and up .3% to the US Dollar to 1.3939.
The U.S. dollar fell against most majors on Friday after China once again made a call for a single reserve currency that would be an alternative to the Dollar.
Improving appetite for risk also played a part in the retreat from the Dollar. A US government data release on Friday showed a spike in personal income for May and a jump in consumer spending, which accounts for over 70 percent of the country's economic activity.
In another report, consumer confidence rose in June to its highest levels since February of 2008, as expectations grew that the worst economic recession since the Great Depression may be ending.
The Dollar closed at 95.16 to the Japanese Yen, down .81%, down .95% to the British Pound to 1.6523, down .2% to the Canadian Dollar to 1.1524, down .7% to the Australian Dollar to .8078 and down .5% to the Euro 1.4055.
CHF
Forex online Traders were cautious when trading the Franc after news of more currency intervention by the Swiss National Bank in an effort to weaken the Franc’s recent surge against the Dollar and Euro.
Switzerland is an export driven economy and a rise in valuation for the CHF could damage trade further. Data on Friday showed the Swiss Economic Institute's economic barometer had risen to negative 1.65 points for the month of June.
The rise was the first one in nearly two years and came in better than the negative 1.76 that was anticipated.
At the close, the Franc was up 1.05% to the US Dollar to 1.0834 and up .53% to the Euro to 1.5232. The Franc was also up .04%, a slight gain, to the British Pound to 1.7904 and up .14% to the Japanese Yen to 87.82.
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The central bank has cut rates from 9.5 % since December as monetary authorities globally slashed borrowing costs to try to revive the ailing global economy.
Most central banks have stopped cutting rates as signs have emerged that the worst of the global slump is over, prompting financial markets to start pricing in when rates might start to rise again.
Analysts in a Reuters poll had expected Bank Indonesia to cut its interest rate by 25 basis points to a record low of 6.75 % on Friday.
They expect rates to fall to 6.50 % by the end of the year, the poll showed.
Data on Wednesday showed annual inflation in June fell to 3.65 %, its lowest level in nine years.
Bank Indonesia Deputy Governor Hartadi Sarwono said on June 29 there was room to cut rates again.
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The Dollar was down against most currencies on Monday, save the Japanese Yen which it had bounced back against off of a five-month low.
The movement came as a result of speculation that corporate earnings might not be as weak as first thought. This fuelled gains on Wall Street and saw the return of risk appetite in the Forex.
At midnight GMT, the Dollar was down .35% to the Euro to 1.3971, down .2% to the British Pound to 1.621, down just over 1% to the Canadian Dollar to 1.153, down .4% to the Australian Dollar to .7812 and down .25% to the Swiss Franc to 1.0832. The Dollar was up .3% to the Japanese Yen to 92.79 off of a 5 month low of 91.73.
EUR
The Euro made some gains on Monday, after European Central Bank (ECB) President Jean-Claude Trichet reversed course and gave a slightly more positive outlook for 2009 growth in the Eurozone.
Only two weeks ago after the ECB policy meeting, Trichet sounded bleak about prospects for growth this year and only alluded to the beginning of a meaningful recovery in 2010.
At 12:28AM GMT, the Euro was up .6% to the Japanese Yen to 129.7, up .4% to the British Pound to .8617, down .6% to the Canadian Dollar to 1.6116, down .11% to the Australian Dollar to 1.7876 and even versus the Swiss Franc to 1.5137.
What else is new in the Forex online world? The Yen is under pressure as a result of upcoming Japanese national elections in August. The ruling party had some local election losses this past Sunday, which is sparking fears about change that might affect their economy.
This period of uncertainty will be around until it is clear who will win the election, and only the success of the current government will take the fears out of the trading community.
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