 Fed chairman in testimony before Congress said the economic outlook was “unusually uncertain” and that the Fed was prepared to take additional action if needed. But Bernanke did seem concerned about draining liquidity as opposed to providing further stimulus, which gave his speech while dovish on the economy a hawkish feel in terms of monetary policy. Risk aversion jumped as US stocks fell, helping to boost the Dollar against higher-yielders like the Canadian and Australian Dollars. |
 The Euro slid overnight after failing to move above the 1.30 level as traders digested reports that German lender Hypo Real Estate would need 2 billion euros in case of adverse circumstances. The BOC meanwhile, lifted rates to 0.75% but did so while painting a gloomier outlook for Canadian growth. US housing starts data came in weaker than expected. |
 The Bank of Canada, as expected, hiked rates by a quarter point to 0.75% in today’s meeting. The accompanying release, while saying economic activity in Canada was unfolding largely as expected, did cut its forecasts for growth in 2010 and 2011. Following the BOC decision, the USD/CAD tested its resistance for this week near the 1.0585 area, as the downgrade to growth assessment weakened the CAD. If the pair moved above this resistance, we can see an attempt to test the 1.0670 area. |
 The market brushed off a downgrade of Ireland by Moody’s as traders and investors look ahead to the release of Euro-zone bank stress tests. The 1.30 level held as resistance for the EUR/USD pair. The Bank of Canada meanwhile gets ready to raise rates by another quarter point tomorrow. |
 The dollar sank to its lowest level since December against the yen as UMich consumer sentiment plummeted in July adding to other economic data which has caused investors to question the pace of the U.S. recovery. US stocks were down sharply. That helped both the greenback and yen gain against growth sensitive currencies like the Australian and Canadian Dollars. |
 The US Dollar continues to suffer against the other major rivals – the Euro, Pound and Yen – as its data continued to support the view that the US recovery is slowing and the Fed will have to push back interest rate hikes to next year. Currencies tied to global growth such as the Australian and Canadian Dollars traded sideways on concerns about the global economy. |
 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 Dollar extended losses against the Euro, Yen, and Pound as data continues to show a US economy that will need the support of low interest rates from its central bank. While there was a surprise in the number of people filing jobless claims fell by 29K to their lowest since August 2008, it may have… |
 Fed policy makers confirmed what the data the last month and a half has been showing – that the US economy faces a relatively modest worsening. Weaker than expected retail sales data only brought home the point in earlier NY trading. The greenback was weaker with the Euro and Pound rising, while the Yen benefited from traders taking some risk off the table. |
Euro Rallies on Manufacturing & Services Data, Higher Yielders Up on Risk Appetite
Fundamental Updates \ Nick Nasad \ 12:00 PM EDT \ July 22nd, 2010The Euro broke a spell of weakness against the Dollar as it found support from better than expected manufacturing and services data in the form of the flash version of purchasing mangers indexes and a reading on industrial new orders. US stocks moved to their highest this week as a collection of companies topped earnings estimates, raised their forecasts or did both. That helped power gains by risk sensitive commodity currencies like the AUD and CAD.