 The AUD/USD pair is coming to some important technical levels, retesting its highs from mid-June, but also probing the lower area of the consolidation zone it had seen throughout October ‘09 till early May. Let’s examine the factors affecting both economies and currencies. Some Background First though its important to know how we got here. The Aussie had… |
 The Euro was higher on developments in its financial sector. The strength in Europe helped boost the Pound as well. Overnight the Aussie was sold as there was further evidence that China’s economy was cooling, perhaps even faster than expected. In the US weak jobs data hurt the USD/JPY pair, continuing the trend of the Yen gaining as US Treasury yields decline. . |
 The Euro managed to rally against its rivals as a three-month tender by the ECB showed less than expected demand for loans from the bank. The Pound lost ground on end of the month flows while commodity currencies were weaker as a result of concerns about global growth and a weak US ADP employment report. |
 The big news coming out of the weekend was China announcing that it would end its two-year peg of the Yuan to the Dollar. A stronger yuan will boost the purchasing power of China and its consumers, benefiting countries that export to China such as Australia. The Aussie rallied Sunday, gapping higher to start the week. |
 Overnight the risk rally from last week was extended as we had stronger than expected industrial production data from the Euro-zone and quarterly manufacturing report from Japan. The Euro, Pound and commodity currencies rallied against the Dollar, our so called “risk-on” trades. However, in late NY trading Moody’s downgraded Greece which cut gains in US stocks and in oil prices which pressured the Canadian Dollar and the US Dollar against the Yen. |
 Today our theme of risk appetite hit a speed bump as we had some weak fundamentals from the UK and US that will surely bring back the chorus of those that see a double-dip global recession on the horizon. While growth is strong in the developing world – China comes to mind – the developed nations are seeing some worrisome signs heading into the second half of 2010. |
 There was a slew of reports on the fundamental docket including strong Chinese trade data, a strong Australian jobs report and better thane expected Japanese GDP data. That helped set off some risk appetite in global markets. We had 3 central bank decision – from the RBNZ, BOE and ECB. In North America we saw US trade and jobless claims data as well as trade figures from Canada. |
 Stocks opened very strong in the US session following gains in Asia and Europe, which extended the sense of risk appetite in financial markets and helped to boost “risk-on” trades. Global data was on the plus side and ECB Trichet’s press conference helped the Euro to rally. |
 News leaked that Chinese exports were going to show a strong reading in May helping to boost risk appetite as it reaffirmed that the global recovery is still on pace. Some cautiously optimistic words from Fed Chairman Bernanke also helped to boost investor sentiment. That helped commodity currencies gain like the Australian and Canadian Dollars to gain on the Dollar. A rally in US equities was cut down in afternoon NY trading which caused “risk-on” trades to pare some of their gains during the session. |
Daily Video Recap: USD Slides as US Equities Higher Power Risk-On Trades
Fundamental Updates \ Nick Nasad \ 4:44 PM EDT \ July 26th, 2010A better than expected new home sales release helped to spur gains in US equities which pushed up higher yielders at the expense of the greenback. The EUR/USD tested its one-week high at the 1.30 level.