Forex Focus
EUR/USD Performance Chart (03/09/10 19:00)
| Daily % Chg |
0.27% |
|
3 months |
7.85% |
| 1 week |
0.75% |
|
6 months |
-5.63% |
| 1 month |
-2.29% |
|
1 year |
-9.85%
|
Details
| Prev close |
1.2825 |
|
|
52 week high |
1.5144 |
| Last trade |
1.2859 |
|
|
52 week low |
1.1877 |
| High |
1.2889 |
|
|
Low |
1.2809 |
Bloomberg Median Forecasts
| Q1 2010 |
1.39 |
|
Q3 2010 |
1.25 |
| Q2 2010 |
1.25 |
|
Q4 2010 |
1.25 |
|
|
|
Commentary
So far today, The euro has put together some respectable gains against the dollar. Even before the US employment report, the common currency shrugged off a Retail Sales figure for July that missed expectations. Coming in at 0.1%, the July statistics still showed sluggish growth in the European retail sector, but it was after all, still growth. The Bureau of Labor Statistics (BLS) was better than expected, but could still not be considered good by any means. Immediately following the release of the BLS report, volatility, as one would expect, kicked up in the EUR/USD pair. The interesting aspect though was not the volatility, but the price action the volatility created as this pair whipsawed for the hour following the report. As we have seen in the past, sometimes reports that are more positive for the US economy, actually weaken the US dollar as traders embrace risk. This is a phenomenon that we didn’t really see much of over the summer months, but then again, we didn’t really see any positive US reports over that time frame either. With the directional uncertainty following this report, it could indicate that we are moving back into a time where positive news, even out of the US, actually weakens the dollar as the safe haven play disappears. As of this writing, the euro is still holding near the highs of the day. Dan Cook, Chicago
GBP/USD Performance Chart (03/09/10 19:00)
| Daily % Chg |
0.26% |
|
3 months |
6.73% |
| 1 week |
-0.57% |
|
6 months |
2.01% |
| 1 month |
-2.78% |
|
1 year |
-5.11%
|
Details
| Prev close |
1.5401 |
|
|
52 week high |
1.6878
|
| Last trade |
1.5441 |
|
|
52 week low |
1.4231
|
| High |
1.5467 |
|
|
Low |
1.5390 |
Bloomberg Median Forecasts
| Q1 2010 |
1.60 |
|
Q3 2010 |
1.52 |
| Q2 2010 |
1.47 |
|
Q4 2010 |
1.51 |
|
|
|
Commentary
The pound found support just below the 1.5400 level after a worse than expected Services PMI reading put a dent in the value of the GBP. The headline reading at 51.3 still indicated growth in the British services sector, just at a slower pace. Unfortunately, some of the key points noted in the report were not as rosy. In the news release Markit noted the “uncertain economic climate”, that “employment fell at strongest pace since October 2009”, and that “business confidence remained historically low.” After some brief weakness and a spell moving sideways, the risk appetite created by the US non-farm payroll report was able to bolster the Sterling bulls. While the euro has climbed to new weekly highs today, the pound has not been so fortunate. There is still a great deal of uncertainty over economic factors in both the US and the UK and investors have been reluctant to push too hard in either direction. As we close out the week, the GBP/USD pair is sitting almost exactly in the middle of this week’s trading range, 127 pips below Monday’s high of 1.5578 and 124 pips over Tuesday’s low of 1.5327. Dan Cook, Chicago
USD/JPY Performance Chart (03/09/10 19:00)
| Daily % Chg |
0.14% |
|
3 months |
-7.63% |
| 1 week |
-0.96% |
|
6 months |
-6.51% |
| 1 month |
-2.17% |
|
1 year |
-8.48% |
|
Details
| Prev close |
84.28 |
|
|
52 week high |
94.99 |
| Last trade |
84.40 |
|
|
52 week low |
83.60 |
| High |
84.53 |
|
|
Low |
84.17 |
Bloomberg Median Forecasts
| Q1 2010 |
91.00 |
|
Q3 2010 |
88.00 |
| Q2 2010 |
93.00 |
|
Q4 2010 |
90.00 |
|
|
|
Commentary
The dollar and yen put in some pretty incredible moves this morning, but it was really all for naught as this pair remains virtually unchanged from previous levels. USD/JPY is always interesting to watch as a gauge of the broader markets attitude toward risk. With the yen typically being the number one safety play in currencies and the US dollar typically coming in second for that honor, a lot can be gleaned from their price action. This morning, after the US non-farm payroll report showed that about ½ the expected number of jobs were lost in August and Private Payrolls gained more than 50% more than expected with a total of 67K, risk appetite roared and the dollar flew higher against the yen. After the initial run though and following a very weak ISM Non-Manufacturing PMI reading of 51.5, it was time for traders to pull back on risk and find safe haven in the yen heading into the weekend. Over the course of about 2 hours it was 80 pips up, followed by 90 pips down and then the pair finally stabilized. Even though there have been some good signs lately and even though the equity markets have had a strong performance, looking at the USD/JPY pair still sitting at levels not far above the low point of 15 years ago tells me the markets are not overly confident that we are out of the woods yet. Dan Cook, Chicago
Notes: Chart data sourced from Bloomberg. Bloomberg Median Forecasts are produced by Bloomberg by taking the median level from rates forecast by a number of contributors. These contributors consist of leading banks and security firms.
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