NEW YORK (Forex News Now) – Daily Market Overview – The U.S. Dollar gained sharply against most major currencies as commodities weakened and growth in the Chinese economy caused concern of interest rate hikes. The Chinese reported that their GDP growth had reached 9.8% for the fourth quarter of 2010. Also, positive results in some U.S. numbers added additional support to the Greenback.
Economic releases in the daily forex news later today include the German Ifo Business Climate and the Belgium NBB Business Climate surveys in the Eurozone; U.K. Preliminary Mortgage Approvals and Retail Sales and Canadian Retail Sales.
January 20th Important Forex Developments:
- Euro Holds Steady Despite Portugal and Ireland Concerns – EUR/USD analysis showed the Euro held strongly against the Greenback despite positive U.S. economic numbers. The Euro was resilient despite news that Irish Prime Minister Brian Cowen was forced to call an early election after an effort to reshuffle his cabinet went against his plans and a third of his cabinet walked out. In addition, there was talk of Moody’s cutting Portugal’s debt rating despite a successful auction which raised €750B in Treasury Bills on Wednesday. In economic releases Thursday, German PPI was up +0.7 month on month, versus an expected rise of +0.5%. In addition, U.S. Initial Jobless Claims dropped to 404K versus 422K expected and U.S. Existing Home Sales rising by +5.28M, considerably better than the +4.88M expected. The U.S. numbers were especially encouraging, indicating the economy may be on the upswing.
- GBP/USD Lower on Negative CBI Orders Number – Sterling fell against the U.S. Dollar on Thursday in part due to the strong housing and employment numbers out of the U.S. In addition, the U.K. CBI Industrial Order Expectations came out with a reading of -16 significantly worse than the expected reading of -1. The index surveys U.K. manufacturers as to what they expect their order volume will be for the next 3 months.
- Japanese Yen Sharply Lower on Better U.S. Data– Intraday analysis showed USD/JPY gained considerably in Thursday’s session, primarily on the better than expected numbers out of the United States and in the lack of any significant economic data out of Japan. USD/JPY began trading at the 81.98 level in the Far East and ended near the highs at 83.00.
- Australian and New Zealand Dollar Sharply Lower On Lower Commodity Prices – AUD/USD and NZD/USD were the weakest performers against the U.S. Dollar in currency market trading on Thursday. With the price of gold dipping under the $1,350 level and crude oil breaking $90 per barrel, the commodity currencies were hit hard. The Aussie began the session right below the parity level and sold off to the 0.9831 level before recovering somewhat. The Kiwi also sold off sharply, from the 0.7680 level, down to the 0.7550 level late in the session.
- Canadian Dollar Off Slightly Despite Positive Data – The Canadian Dollar held its own against the Greenback on Thursday falling only fractionally on the day. Supporting the Loonie were Canadian Wholesale Sales, which increased by +1.2% month on month, considerably better than the consensus of a +0.3% increase, and the Canadian Leading Index gaining +0.5% month on month, edging the +0.4% expected.
January 21st Forex Events for Traders To Watch
- Eurozone Belgium NBB Business Climate and German Ifo Business Climate – Two significant economic surveys to be released later today that will affect the Euro. Both surveys gauge how thousands of businesses rate the relative level of business and what they expect over the next six months. The German Ifo number is expected to be 110.0 while the Belgium NBB reading is expected to be 3.3. A positive reading for these surveys will give the Euro additional upside potential.
- U.K. Retail Sales and Preliminary Mortgage Approvals – The U.K. will release Retail Sales this morning and they are expected to be -0.2%. Also out early today will be U.K. Preliminary Mortgage Approvals, expected to be out with a reading of 49K. Both numbers will have an effect on Cable.
- Developments in the Eurozone – Any indications of downgrades to sovereign debt for Eurozone countries and whether the European financial safety net will be expanded could affect the EUR/USD exchange rate.
- The Price of Gold and Oil – The price of gold is currently at the $1,347 per ounce level, if the sell off continues, this could strengthen the U.S. Dollar and will most certainly adversely affect the Aussie, Kiwi and Loonie.
- Canadian Retail Sales and Core Retail Sales – Two significant numbers which will certainly affect the USD/CAD rate. Canadian Retail Sales are expected to drop from 0.8% to 0.5% and Core Retail Sales, from 0.9% to 0.6%.