- Light Trading Leads to Euro Consolidation
What Matters More For the US Dollar: Yield or Growth?
Visit the Euro Currency Room for resources dedicated specifically to the Euro.
British Pound Tanks after
biggest story in the currency market today was Prime Minister Gordon
Brownâ€™s announcement that the government will be temporarily
nationalizing Northern Rock. This decision has
received a lot of backlash and triggered a wave of British pound
selling because in doing so, the government rejected two private sector
bids. Taking such a major business into public
ownership will cause a serious blow to the governmentâ€™s credibility and
expose them to shareholder lawsuits. The
government has pledged to return Northern Rock to the private sector
when â€śmarket conditions are betterâ€ť but this will not satisfy
shareholders who now believe that Northern Rock will be run with
politics rather than economics as the primary concern. Meanwhile the Rightmove House Price Index suggests that we could see stabilization in the
Visit the British Pound Currency Room for the latest support and resistance levels.
Light Trading Leads to Euro Consolidation
With no US or Eurozone economic data released today, the Euro fell marginally against the US dollar. We continue to hear mixed comments out of the ECB, which confirm the marketâ€™s belief that the central bank is growing less hawkish. ECB member Liikanen said that Eurozone growth will likely fall below 2 percent this year due to weakening sentiment and the ongoing financial turmoil. There is no Eurozone economic data due for release until Wednesday, when we are expecting German producer prices. The Swiss franc on the other hand is down sharply today after a much weaker than expected retail sales report. Consumer spending increased only 1.2 percent in the month December, which was less than a third of the marketâ€™s 5.2 percent forecast. Although Swiss retailers have been benefitting from low unemployment and rising wages, higher food and energy costs have crimped spending. We are expecting Swiss producer prices and the trade balance later this week, both of which could be bearish for the Franc.
Australian Dollar Continues to Outperform,
The Australian dollar continues to be one of the foreign exchange marketsâ€™ best performing currencies. There
was no major economic data released from any of the three commodity
producing countries, but strong economic data and hawkish comments from
the Reserve Bank of Australia last week continues to push the
Australian dollar higher. The
Tell us what you think about the loonie on the Canadian dollar Forum.
Mixed Economic Data Provides Little Support for the Japanese Yen
Japanese economic data was mixed last night which explains the lack of clear price action in the Japanese Yen. The tertiary activity index deteriorated in the month of December, led by a sharp decline in retail activity. Leading economic indicators however improved slightly. The Bank of Japan monthly report echoed the same tone held by BoJ Governor Fukui last week. The report talked about the ongoing slowdown in the
Visit the Japanese Yen Currency Room for resources dedicated specifically to the Euro.
By Kathy Lien, Chief Strategist of DailyFX.com
Contact Kathy Lien about this article at [email protected]