Tuesday August 4, 2009 - 12:51:41 GMT
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Forex Hound - www.forexhound.com
Less Demand for Higher Yielding Assets Buoys U.S. Dollar
Less demand for risky assets is leading to a recovery in the U.S. Dollar and Japanese Yen overnight. Today‚Äôs expected weakness will allow the British Pound, Euro and Canadian Dollar an opportunity to cool off after a tremendous run to the upside since last week.
With the Bank of England and the European Central Bank meeting on August 6th, do not be surprised if the Pound and Euro revert to a sideways trade until the central bank meeting results are released. Preliminary thoughts are for the BoE to leave rates unchanged and to drop its asset buyback program while the ECB will most likely turn hawkish in its commentary.
Compounding the weakness in the Euro overnight was a Euro Zone Producer Prices report which came in up 3.3% as expected.
The call for lower equity and crude oil prices is helping to support the USD CAD this morning. Some traders are expecting commentary from the Bank of Canada regarding the recent rapid rise in the Canadian Dollar and its possible negative effect on Canadian exports.
Overnight the Reserve Bank of Australia left interest rates unchanged at 3% but did hint that it may begin to move away from its easing bias as the economy improves. Less demand for higher yielding assets is pressuring both the AUD USD and NZD USD this morning.
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