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[forextrends24]

Today's Forex Analysis summary


The Australian Dollar could be looking at a sharp sell-off as signs are out there that investors are focusing more on the Australian economy than the higher yields offered by the market. Even the stock market rally on Wednesday could not encourage risk hungry traders to go after the higher yielding AUD USD. This is clearly as sign of developing weakness and is likely to trigger further downside pressure as traders are shifting their needs from return on capital to return of capital.

The NZD USD is facing similar issues as the Australian Dollar. With the economy showing signs of weakness, investors know the Reserve Bank of New Zealand has to take action to prevent the on-going recession from deepening and widening. Most traders are calling for quantitative easing or an intervention as the best short-term solution. The RBA may cut rates again since they have room to do so, but the speed of the decline in the economy will most likely counter-act a slow-moving interest rate reduction.

The U.S. Dollar weakened versus the Japanese Yen on Wednesday. Traders were mixed in their opinion as to why the USD JPY fell. Some felt it was caused by flight-to-quality buying because of lingering U.S. banking issues. Others felt that although Japan’s exports were down last month, they were slightly better than last month. This news was interpreted as the start of possible bottoming action.

The Canadian Dollar closed lower today in a volatile two-sided trade. Several times throughout the New York session, the market traded on the plus side only to be met with selling pressure which drove it lower. Traders seemed reluctant to take a major position ahead of an important Bank of Canada announcement report

The news that the U.K. budget deficit would soar to 175 billion Pounds encouraged selling pressure all day in the GBP USD. Technically the daily chart main trend is down.

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[jeff15]

Forex UpdatesThe Euro (EUR/USD) the Euro moved advanced during the Asian session, fell down at the London open, recovered and then fell down in the US session, finally ending the day slightly higher. Volume was low as of the bank holiday in most of Europe and the pair managed to hold more than the 100-day simple moving average. Today, there was a no Euro-zone economic release.

The Pound (GDP/USD) On Friday, cable moved much higher, testing the 1.4900 level at the end, as the Pound rallied after the UK manufacturing PMI beat analysts’ outlook, coming in at 42.9 and on news that mortgages approval gained to the highest level in 10 months in March. The pair increased about 100 pips on the day and closed at the highest level of the week.

The CAD (USD/CAD) Equity markets were closing higher, oil prices ahead almost $2 a barrel and better than estimated US. ISM manufacturing PMI all added to the CAD rising on Friday. Each economic release that gives a sign the global financial crisis may be finding a bottom gives an increase to the Canadian and we have seen the CAD declined for three straight days. The pair plunged 70 pips on the day and closed just over the 200-day simple moving averages.

[money_maker]

The euro fell as low as $1.4665 in early trade, its weakest since early November but reversed those losses in Europe on the view that the weak state of Greece's public finances was well known in the market and that the move had overshot. It picked up to trade at $1.4749.

"It could not have come as a major surprise that Greece has fiscal problems. While there is always the risk of another heavily-indebted country being downgraded this year...it looks like the euro will now stabilise at around $1.4700," said Stuart Bennett, senior currency strategist at Calyon in London.

Sterling slid to a near two-month low against the dollar, knocked in the run-up to the UK government's pre-budget report, which was expected to highlight Britain's dire fiscal position.

In Asian trade, traders had shed higher-risk currencies, including the euro, after ratings agency Fitch cut Greece's sovereign debt to BBB+ from A-.

Analysts said issues surrounding the financial health of Greece, whose economy accounts for around 2.5% of the euro zone, highlighted the fact that countries in the 16-country bloc continue to suffer from the global recession.

[money_maker]

"It's all on the shoulders of leadership. They're responsible for making sure we don't default," said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group.

And if the debt ceiling isn't increased by the end of this year, the nation is likely to default on its debt. That would unleash a chain of events that could devalue U.S. bonds and seriously harm the nation's reputation with creditors around the world. In short, it's not something lawmakers can afford to let happen.

For the fiscal hawks, agreeing to vote for a short-term increase to the ceiling buys them time to insist the leadership address their demands, which differ somewhat in the House and the Senate.

Fiscal conservatives in the House, known as Blue Dogs, have said they would vote against a big increase in the ceiling unless the legislation re-enacts so-called pay-go rules, which require lawmakers to pay for any new spending proposals or tax cuts. But that proposal excludes about $3 trillion worth of policies that are likely to be extended, including the Bush tax cuts for the majority of Americans.

That's why the House version of pay-go may be a no-go in the Senate. Senate Budget Chairman Kent Conrad, D-N.D., has said he supports pay-go but not if it exempts pricey policies.

Meanwhile, a bipartisan group of senators says it won't vote for a large debt ceiling increase unless the leadership commits to a "credible process" for reining in the country's debt.

The senators' proposal, similar to one in the House, is to create a bipartisan fiscal commission charged with making recommendations to Congress for reining in runaway spending growth that threatens to overwhelm the federal budget. Lawmakers would be required to vote up or down on the recommendations but would not be allowed to amend or filibuster them.

[vijendrasnv]

Great information shared here by all.
This is really interesting and useful for forex trading.Enjoyed this updations.
Thanks for sharing.