Friday July 17, 2009 - 12:22:54 GMT
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Forex Hound - www.forexhound.com
Flight-to-Safety Buying Drive Dollar, Yen Higher
Overnight events are encouraging safe-haven buying in the Forex markets in Europe. CIT bankruptcy concerns and explosions at hotels in Jakarta are sending investors to the safety of the U.S. Dollar and Japanese Yen.
The flight-to-safety rally is also triggering weakness in emerging market equities. The developing fear mentality could spill over into the U.S. Forex and equity market openings where traders are already nervous about today‚Äôs U.S. Building Permits and Housing Starts Reports.
Bearish news is triggering weakness in global equity markets overnight while encouraging flight-to-safety buying in the U.S. Dollar and Japanese Yen. The AUD USD is under pressure as demand is diminishing for higher yielding assets.
Lower global equity markets as well as nervousness over U.S. housing reports and earnings reports from Bank of America and Citigroup later this morning is helping to put downside pressure on the NZD USD overnight.
Flight-to-safety buying has the USD JPY under pressure overnight. News that the CIT Group may file for bankruptcy has been making traders nervous for two days, but explosions at hotels in Jakarta overnight encouraged traders to take protection.
The USD CAD is stabilizing overnight as weaker equity and oil markets are encouraging traders to buy the U.S. Dollar. Currently this currency pair is at a critical level on the daily chart.
The EUR USD will turn bullish over the swing top at 1.4201. A break back under 1.4042 will be a sign of weakness with 1.3998 the next downside target.
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