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The Dollar rallied against most currencies on Thursday, buoyed by demand from US corporations seeking to square their books by month-end and those scrambling for cash to cover a seasonally thin year-end period.
Analysts said US data on jobless claims and New Home Sales for October did little to alter expectations that the Federal Reserve will reduce interest rates by 0.25 to 4.25% next month after it cut them by a cumulative 0.75 since September to cushion the economy from a severe housing slump and credit market turbulence.
Fed Chairman Bernanke said late on Thursday a resurgence in financial strains in recent weeks had dimmed the outlook for the US economy, signaling an openness to again lowering interest rates.

Source : ACM

The Dollar rallied against most currencies on Thursday, buoyed by demand from US corporations seeking to square their books by month-end and those scrambling for cash to cover a seasonally thin year-end period.
Analysts said US data on jobless claims and New Home Sales for October did little to alter expectations that the Federal Reserve will reduce interest rates by 0.25 to 4.25% next month after it cut them by a cumulative 0.75 since September to cushion the economy from a severe housing slump and credit market turbulence.
Fed Chairman Bernanke said late on Thursday a resurgence in financial strains in recent weeks had dimmed the outlook for the US economy, signaling an openness to again lowering interest rates.

Source : ACM

The Dollar edged lower against the Euro and trimmed gains versus other European currencies on Wednesday as comments from a Federal Reserve official and a key economic report affirmed expectations for further rate cuts. However, it posted steep gains against the Yen, buoyed by sharp gains in the stock market, with investors going back into riskier assets.
Government data showing New Orders for long-lasting US-made goods dropped for a third month in October, with companies appearing wary about making new investments.
Most analysts believe the Dollar could further decline given the weak tone in US economic data and the trickle of bad news from financial companies hit by the credit crunch. The Fed is widely expected to cut interest rates by 0.25 in December to 4.25% and again next year to stem economic fallout from the housing debacle.

Source : ACM

Written by Terri Belkas, Currency Analyst DailyFX

Fundamental Headlines

•    AUDUSD – HIA new home sales data showed an 0.8 percent rise in the sale of homes during October, marking the slowest pace of growth in six months as tighter RBA monetary policy cools demand.
•    USDJPY – Japanese retail sales for October rose at a better-than-expected 0.3 percent from the month prior, pushing the annual rate up to 0.8 percent. Gas prices led the index higher, though auto sales also contributed to gains.
•    EURUSD – GfK German consumer confidence for December fell back in line with expectations to an index reading of 4.3. The decline is not entirely surprising given current outlooks, as the tightening of the credit markets and mounting inflation pressures quell growth prospects in 2008.
•    USDCHF – The KOF Swiss leading indicator fell modestly to 2.02 in November from an upwardly revised 2.04. Nevertheless, the index is still relatively strong and highlights the resilience of the Swiss economy.

Source: FXCM

The Dollar gained broadly on Tuesday as news that Citigroup would sell a $7.5 bio stake to the Abu Dhabi government triggered a wave of buying from traders who rely on computer models. The overnight Citigroup news restored confidence in battered US banks, fueling a steep rally in the stock market.
The Dollar pulled away from a 2-1/2-year low against the Yen touched on Monday to trade at 108.82, up 1.37% and on track for its biggest one-day gain since late August. The Yen fell broadly as news of the Citi stake sale prompted a recovery in the Nikkei share index, fueling demand for relatively riskier assets.
Comments by Federal Reserve Bank of Philadelphia President Charles Plosser (not a voter on Fed monetary policy) had little impact on the currency market. He said US interest rate cuts increase the risk of higher inflation.

Source : ACM

The Dollar slid further to a fresh 2-1/2-year low against the Yen on Monday in line with falls in US equities, as renewed credit worries affirmed expectations that more US rate cuts are imminent. The interest rate futures market has fully priced in a 0.25% monetary policy easing by the Fed when it next meets on Dec. 11, to 4.25% and show a 20% implied chance it could cut rates by a 0.5% instead.
EurUsd was up 0.26% at 1.4877, within sight of the lifetime high of 1.4967 set on Friday. ECB Governing Council member Nout Wellink said on Monday its rise against the Dollar was not of “immediate concern” for European exporters but a further ascent would be “worrying”.

Source : ACM

The Euro set a record high against the Dollar on Friday at 1.4967; the key 1.5000 level remained out of reach and the EurUsd fell back more than a cent, at 1.4839, on comments from a Euro zone policy-maker.
European Central Bank Governing Council member Miguel Angel Fernandez Ordonez said he saw a greater-than-expected economic slowdown in the Euro zone and there was not enough data to dispel uncertainty about the effects of financial market turmoil.
End of last week, moves in currencies were exacerbated by thin liquidity following the Thanksgiving holiday in the United States on Thursday and a Japanese market holiday on Friday.
The Yen and the Swiss franc have both benefited in recent sessions as investors, worried about the fallout from credit market problems and the impact on the broader economy, remained averse to risk. Worries about the fallout have been stoked by the OECD.

Source : ACM

The Dollar took another beating early this morning, dropping to record lows against the Euro, the Swiss franc and a basket of currencies because of a growing view that the US Federal Reserve will cut interest rates again next month.
Forex traders said low liquidity in the holiday-thinned market exaggerated currency moves and prices could remain volatile for the rest of the day. US markets were closed on Thursday for Thanksgiving and Japan’s markets are closed on Friday for a national holiday.
Economic Co-operation and Development (OECD), which warned in a report on Wednesday that overall losses caused by the US mortgage market crisis could feasibly hit $300 billion.
European Central Bank President Jean-Claude Trichet said on Thursday he was against abrupt and “brutal” swings in exchange rates, but investors still pushed the euro well above 1.4900 to put a test of the psychologically important 1.5000 level in sight.

Source : ACM

US Thanksgiving holiday.
The Yen surged to its highest level against the Dollar in more than two years on Wednesday as investors pared back exposure to risky trades on worries about credit market losses and the health of the US economy.
The dollar also hit a record low against the Euro for the second straight day.
The UsdJpy fell below 109 for the first time since June 2005 as global stocks weakened and oil prices pushed toward $100 a barrel. The low-yielding Japanese currency tends to do well in times of risk aversion because investors unwind carry trades that use cheaply borrowed Yen to buy higher-yielding currencies.
Risk appetites began to weaken on Tuesday after the second-largest US mortgage finance company, Freddie Mac, reported a record loss, prompting fears it would be unable to provide liquidity to an already struggling home loan market.

Source : ACM

The Dollar slid to a record low versus the Euro on Tuesday after the Federal Reserve said a housing slump, tighter credit conditions and high oil prices would likely slow US economic growth in 2008.
The minutes of FOMC’s October meeting revealed officials’ decision to cut rates was a close call following a debate on whether to await more evidence that a housing slump was curbing growth.
The Fed’s forecast for US growth to slow next year to between 1.8% and 2.5%, sharply down from the 2.5 to 2.75% forecast in June, suggested to some investors that the Fed will have to cut benchmark lending rates again in December or earlier to prevent the economy from stalling further.

Source : ACM