Monday October 25, 2010 - 12:10:43 GMT
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Greenback Hammered after G-20 Offers No Support
The U.S. Dollar is trading sharply lower against all major
currencies after the Group of 20 finance ministers and central bankers over the
weekend failed to come up with any plan to shore up the Greenback.
The U.S. Dollarâ€™s downtrend is likely to continue after the
G-20â€™s joint committee warned of the need to move toward more
â€śmarket-determinedâ€ť currency exchange rates. This basically means no
interference from the central banks. This same committee also said that a
global economic recovery is underway but uneven. By allowing letting the market
determine the Dollarâ€™s value, the G-20 is saying the stronger currencies will
The USD JPY continued its slide, reaching a fresh 15-year
low. This pair is rapidly approaching its 79.70 low hit during the second
quarter of 1995. The rise in the Yen is
also putting a hurt on Japanese companies and the economy.
The EUR USD resumed its rally. Although the daily main trend
indicator is still down, upside momentum is building which may mean another
test of the last main
top at 1.3884.
After forming a support base at a major 50% level at 1.5701,
the GBP USD is mounting a small rally. Expectations are for this pair to rally
back to a downtrending
Gann angle at 1.5866. If upside momentum is strong enough, this market may
reach a 50% level at 1.5878. This could be another selling opportunity as
traders still feel the Bank of England
will implement another round of quantitative easing because of the weakening
After a strong short-covering rally drove the Dollar/CAD
into a major 50%
level, it looks as if this market is set to resume its downtrend. This
morning this pair is testing a retracement zone at 1.0176 to 1.0129. Once this
area is cleared, look for a test of an uptrending
Gann angle at 1.0119.
Although the Bank of Canada
refrained from hiking its benchmark interest rate earlier in the month while
warning of an economic slowdown, the U.S. Dollar is just too weak to ignore,
thereby setting up the USD CAD for another test of parity over the short-run.
After an early response to the G-20 announcement, traders
will be given a chance to react to this morningâ€™s U.S. existing Home Sales. Early
guesses are for this report to show a rise of 6.3% to 4.39 million. This is
versus last monthâ€™s rise of 7.7%.
Itâ€™s still too early for traders to shut down in
anticipation of the U.S. Federal
Reserve Open Market Committee announcement on November 3.
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