16 September, 2013
Currency markets reacted strongly to the news that Larry Summers is withdrawing his consideration for candidacy for the Fed Chairman position, increasing expectations that a more dovish leaning candidate will take over.
One of the front runners now is Janet Yellen, who is likely to continue Ben Bernanke’s quantitative easing polices and loose monetary policy, which tend to weaken the dollar. Hence the dollar was sold off by investors today and U.S. yields are lower.
Of the G10 currencies, the pound and the aussie were the best performers.
Until recently, the dollar has been gaining as investors have been so incredibly dependent on the idea that the Fed will begin tapering soon. Larry Summers was seen to be in favour of tapering so the fact that there is now uncertainty whether the next Fed chief will be pro-tapering has made the dollar more vulnerable.
EURUSD is stronger today at $1.3360 on the Summer news but also helped higher by ECB’s Draghi reiterating forward guidance, while Euro zone inflation data came in as expected.
GBPUSD surged to a near nine-month high of $1.5917 in Asia and hovered near this level in the London session.
USDJPY is down half a percent due to a broadly weaker dollar, while Japanese markets are closed for a public holiday today.
AUDUSD is up 1.5 percent as risk appetite is back on, with the pair rising to $0.9382.
Looking ahead to the U.S. session data, we have Empire State manufacturing index and U.S. industrial production data.
The Asian session was calm as the economic calendar was light and most investors were positioning ahead of key risk events later this week, primarily the US nonfarm payrolls report on Friday...
The first full trading week of 2014 began today, with Japan opening for the first time after a two-week holiday...
The pair extended the positive trading, whereas it approached 61.8% correction at 1.3625
The dollar rose above 102.00 yen for the first time since May 29, while the euro flirted with the key $1.36 handle and hit a new four-year high within striking distance of 139.00 yen...
The best performing currency during Thursday’s Asian session was the Australian dollar which jumped against its US counterpart after strong Australian business spending data. Private Capital Expenditure increased by 3.6% quarter-on-quarter despite expectations for a decline by 1.1%...
The main currency of the day was the sterling which outperformed against the dollar and euro, as well as against the yen after being boosted by strong UK second quarter growth data...
The euro was stronger today particularly against the dollar and the pound. While there were no economic data releases today from the Eurozone to explain the move, there were some headline news which affected sterling and dollar...
The yen was supported by safe haven demand today after the release of a slightly dovish Bank of Japan policy meeting minutes. The minute from last weeks meeting showed some concern about Japans economic outlook and whether the central bank 2% inflation target could be met...
The dollar remains bullish against the yen, while the euro hit a new four-year high against the Japanese currency in todays Asian session...
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