Week Ends with Further Greenback Weakness
Week Ends with Further Greenback Weakness
EUR/USD - Euro Climbs to 1.40 For First Time Since January
The Euro-Dollar pair continued its climb to end the week, as the greenback faced further pressure on concerns about US creditworthiness. The pair rose above the 1.40 level for the first time since January, adding to gains this week that have amounted to almost 600 pips. It’s the biggest weekly decline since March. Also, signs of a recovery from the recession will undo the demand for the greenback as a safe haven. Combined with the possibility that the US could lose its AAA credit rating, has very serious implications for Dollar strength in the medium term.
USD/JPY - Dollar Slides to 9-Week Low
The Dollar-Yen pair fell to a nine-week low overnight at the 93.85 area, though the greenback managed to recoup some of its losses in NY trading. Equities in Europe and the US rebounded from their losses yesterday, which weakened the Yen. For the week, the pair will end near where it started, but the price action this week pointed heavily towards greenback weakness after the dollar rose to start the week but then sank from Tuesday onward.
EUR/JPY - Euro Breaks Out of Consolidation vs Yen
The stronger performance of equities showed in the Euro-Yen pair, as it managed to break out of its range seen the previous 3 sessions. After cracking the short term trendline representing resistance the pair climbed another 120 pips reaching the 132.70 area. That puts the Euro about 400 pips higher than at the start of the week. The previous week the pair was in a downtrend that now, after a rebound and consolidation seems to be continuing.
JPN Bank of Japan Upgrades Assessment of Economy
In fundamental news from Japan, the Bank of Japan, after concluding its interest rate meeting, kept interest rates steady and upgraded their view of the economy for the first time in almost three years as they expect exports and industrial production to pick up following the significant deterioration in conditions in the 1st quarter. Policy makers also decided to accept foreign currency-denominated sovereign bonds as collateral for loans, a move that adds one more avenue for companies and lenders to raise cash.
UK GDP Down on Consumer Spending, Business Investment, Inventories
In the UK, the second version of 1st quarter GDP matched the preliminary version in showing the economy shrinking 1.9%. The release shed more details on what made up the decline. Consumer spending fell 1.2% while business investment slid 3.8%. There was also a sharp pullback in both exports and imports and inventories dropped by 6 billion pounds, a factor in the overall contraction.
GBP/USD - Pound Rises Above 1.59
The Pound-Dollar pair climbed to the 1.59 level in late trading yesterday, tested that level around the Asian open and then retraced down to the 1.5760 area. From there, the pair found buyers and the pair rose to breach the 1.59 area during the NY session. For the week the pair is up about 750 pips, as it broke out of a consolidation pattern that comprised most of last week.
CAN Retail Sales Climb For 3rd Month on Auto Sales
IN Canada, retail sales rose 0.3% for the March period, which was slightly lower than expectations, but higher than the change in February. It was the third consecutive month of increases, with higher new car sales a main contributor to the increase. Excluding auto sales were down 0.2%, breaking two months of gains.
USD/CAD - Loonie Breaches 1.12 Area
The Canadian retail sales release pushed the US Dollar-Canadian pair to a low of 1.12 following a slide overnight after the pair broke below the 1.1350 level. After bouncing up off the 1.12 level initially, the pair retested that level in the NY afternoon session. Like the other pairs we have seen, the greenback was battered against the Loonie this week, falling close to 600 pips. We’ll see if this theme continues into next week or if there will be some retraction to this week’s moves in next week’s trading.
Next Week’s Releases
Monday is a national holiday in the United States and a bank holiday in the UK, meaning liquidity will be limited. Important releases in the first half of the week include Germany’s IFO business climate, the UK Nationwide House Price Index, and US consumer confidence.
Capital Market Services, L.L.C.
www.cmsfx.com
©C2004-2005 Globicus International, Inc. and Capital Market Services, L.L.C. Any information in this report is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Capital Market Services, L.L.C. with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. Capital Market Services, L.L.C. accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this report. No part of this report may be reproduced or distributed in any manner without the permission of Capital Market Services, L.L.C.
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