Wednesday July 8, 2009 - 06:11:30 GMT
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Trendsetter Financial Markets Limited - www.acetraderfx.com
Dollar and yen rise on increased safe-haven appeal of both currencies as investors worry about corporate earnings
Market Review - 07/07/2009 21:36 All times in GMT Dollar and yen rise on increased safe-haven appeal of both currencies as investors worry about corporate earnings
strengthened against a basket of currencies except the Japanese yen on
Tuesday as U.S. stocks tumbled due to investors becoming more
risk-conservative ahead of the earnings season that gets under way this
week. In addition, a member of the Obama administrationâ€™s economic
advisory panel said that the U.S. should plan to possibly provide a
second round of government stimulus to revive the economy.
dropped to as low as 1.3903 against the dollar in European morning as
investors were concerned that the global economic recovery will be
slow. However, the single currency rebounded strongly from there as
Germany posted much higher-than-expected factory orders (4.4% in May
versus economist forecast of 0.5%). This strong German manufacturing
figure suggested that the countryâ€™s economy is continuing to improve.
Cross buying in euro also helped with eur/gbp rallying fm 0.8584 to
0.8657 while eur/jpy rose to as high as 133.93 before erasing all gains
in U.S. session. European Central Bank Governing Council member Axel
Weber said there was no need at present for the central bank to bypass
the banking channel and buy up corporate bonds and indicated there was
no credit crunch in Germany at the moment. Euro tumbled from 1.4051 to
1.3911 in late U.S. session on safe-haven buying. DJI sank 161.27
points or 1.94%, Nasdaq closed down 41.23 points or 2.31% and S&P
500 dropped 17.69 points or 1.97%.
The British pound
slipped against the U.S. currency after the British Chambers of
Commerce suggested that Bank of England should expand its
asset-purchase program to jump-start the economy. Investors treated
this as a piece of sterling-negative news as printing money is a form
of depreciating the currency. Sterling was also pressured by a report
that showed U.K. industrial production unexpectedly fell in May (-0.6%
compared to economist forecast of 0.2%) and manufacturing production in
May also came in worse than expected (-0.5% against consensus
expectation of 0.2%). In New York afternoon, the pound extended its
decline to as low as 1.6117 against the dollar.
Japanese yen strengthened against high-yielding currencies on Tuesday
on risk aversion. Euro, aussie and sterling tumbled against the yen
from 133.93 to 131.83, 76.60 to 74.81 and 155.35 to 152.75 respectively
in late New York afternoon.
Earlier in the day, Reserve
Bank of Australia left interest rates unchanged at 3.00% as
anticipated. The central bank's accompanying statement said the outlook
for inflation allows scope for further easing and that economic
conditions in Australia are not as weak as expected a few months ago.
However, in New York late afternoon, aussie dropped sharply to 0.7891
versus the greenback on dollarâ€™s board-based strength.
to be released on Wednesday includes Japan current account, economic
watch survey, machine orders, Australia Westpac consumer confidence,
Switzerland unemployment rate, U.K. nationwide consumer confidence,
house price, eurozone GDP and German industrial production.
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