NEW YORK (Forex News Now) – Daily Market Overview – The U.S. Dollar was up against all of the major currencies on Tuesday, with the exception of Sterling, which gained fractionally, according to the daily forex news.
The Greenback traded higher as tension in the Middle East continued driving risk aversion in the currency market. This week is Iran’s turn as security forces confront opposition supporters in the Iranian capital, Tehran.
In addition to safe haven buying, USD news showed the Greenback was further supported by comments made by Fed Chair Ben Bernanke in his testimony before Congress on Monday. He stated there was “increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold” despite continued weak employment numbers.
EURUSD analysis showed the common currency gained initially on Tuesday after positive economic data out of the Eurozone, only to fall later in the session as the Greenback gained on risk aversion.
In GBPUSD news, Sterling made a fresh 13-month high against the U.S. Dollar after U.K. Manufacturing PMI came out at a record 61.5 in February. Also, Cable gained on hawkish comments by BOE Governor Mervyn King, who stated that “if we continue to experience above-target inflation for long enough there could be an upside risk to inflation expectations.”
In other forex news, the New Zealand Dollar lost considerable ground against the Greenback after comments by Prime Minister John Key. Key stated that, “the market has priced in a cut from the Reserve Bank…. and that would probably be my expectation, that the Reserve Bank would cut.” The dovish comments by the Prime Minister sent the Kiwi sharply lower.
March 1st Important Economic Developments:
- The Price of Gold Makes New All Time High – Unrest in Iran, sparked a rally in gold, driving the precious metal to a new all time high of $1,435.60 on Monday. In addition, crude oil prices held above the $100 per barrel level.
- Sterling Higher on Positive Economic Data – Sterling made a new 13 month high on Monday after U.K. Manufacturing PMI came out at a record 61.5. Also out on Monday was U.K. Nationwide HPI, gaining +0.3% month on month, versus an expected decline of -0.2% and U.K. Net Lending to Individuals, which increased to +1.5B versus an expected rise of only +0.3B, with the previous number upwardly revised from -0.1B to +0.5B.
- Euro Lower Despite Unemployment Drop – EURUSD lost ground despite positive economic data out of the Eurozone. German Unemployment Change showed a drop of -52K, considerably better than the -13K expected, and the Eurozone Unemployment Rate, which dropped to 9.9% from 10%.
- BOC and RBA Leaves Rates Unchanged – The Canadian and Australian Dollars lost some ground against the Greenback on Tuesday, after the BOC left their benchmark Overnight Rate unchanged at 1.0% as was widely expected and the RBA left rates at 4.75%, also as widely expected. The BOC stated in their post rate statement that “any further reduction in monetary policy stimulus would need to be carefully considered”. The RBA’s post rate statement gave little indications of any changes in the near future.
- Greenback Gains on U.S. ISM Manufacturing PMI – Adding support to the U.S. Dollar on Tuesday was ISM Manufacturing PMI, which came out at 61.5 month on month, versus an expected print of 60.9 indicating inflation is heating up in the United States.
March 3rd Forex Events for Traders to Watch
- Increasing Tensions in the Middle East – Tuesday’s clashes in Tehran, making Iran the next Middle Eastern state to erupt in civil violence, will be closely watched by the market. Tuesday’s record gold price of $1,435.6 per ounce and the price of crude oil holding above $100 per barrel are key indicators for the forex market.
- U.K. Construction PMI – The U.K. housing industry has been gaining strength recently. Wednesday’s release is expected to come out at 53, versus a previous print of 53.7.
- U.S. ADP Non-Farm Employment Change – A key indicator for U.S. employment. Automated Data Processing, processes payrolls for the largest corporations in the United States and this number precedes the all important U.S. Non-Farm payroll numbers out on Friday.
- Bernanke Testimony before Congress – The second day of testimony before the House Financial Services Committee, the Federal Reserve Chairman’s statements generally impact the U.S. Dollar and consequently the entire forex market. Wednesday’s testimony will consist of a question and answer format.
- Australian Building Approvals and Trade Balance – Australian Building Approvals are expected to drop by -3.1%, after last month’s previous rise of +8.7%, while the Australian Trade Balance is expected to show a surplus of +1.53B.