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- Nov, 20 US Dollar, Japanese Yen Surge on Risk Aversion as Dell Earnings Disappoint
- Nov, 19 US Dollar Advances as Nikkei Leads Stocks Lower in Asian Trading
- Nov, 18 Currency Markets May Look Past BOE Minutes, Focus on US Inflation and Housing Data
- Nov, 17 Greenback Finding Some Support into European Trade
- Nov, 13 Euro Vulnerable If Third-Quarter GDP Continues to Show Weak Private Sector
- Nov, 12 Australian Dollar Hits Fresh Yearly High as Jobs Data Boosts Rates Outlook
- Nov, 11 British Pound in Focus as BOE Reveals Inflation Report, Jobless Rate Hits 12-Year High
- Nov, 10 Pound Tumbles on UK Credit Outlook, Euro Exposed with ZEW to fall for Second Month
- Nov, 09 New Zealand Dollar Soars on Exports Outlook, USD Sinks Amid Bets on Dovish Fed
- Nov, 06 Currency Markets to Look Past European Economic Data, Focus on US Jobs Report
- Nov, 05 British Pound in Focus with BOE Set to Expand Stimulus, Likely Inaction from ECB
- Nov, 04 Euro in Focus as Producer Prices Fall For Ninth Month, Threatening Continued Deflation
- Nov, 03 Australian Dollar Falls Despite Interest Rate Hike as RBA Hints Shift to Neutral
- Nov, 02 US Dollar May Correct Lower but Risky Assets are on Shaky Ground
- Oct, 30 Japanese Yen Gains as BOJ Ends Corporate Bond Scheme, Jobless Rate Drops
- Oct, 29 US Dollar May Extend Gains as Dismal European Data Fuels Risk Aversion
- Oct, 28 Euro May Extend Losses as German Inflation Shrinks, Paring Bets on ECB Rate Hikes
- Oct, 27 US Dollar Consolidates Gains, Australian Business Confidence Hits 15-Year High
- Oct, 26 US Dollar Falls as Asian Stocks Advance on Earnings, South Korea GDP
- Oct, 23 Euro Gains in Focus Ahead of IFO, PMI Data; UK GDP May Disappoint in Third Quarter
The US Dollar gained in overnight trading as stocks fell after a high-profile downgrade of top US home lender Wells Fargo weighed on investors’ confidence while China’s economy grew the most in a year, stoking speculation the government will unwind stimulus.
Key Overnight Developments
• Japan's Exports Shrink Least in 10 Months on Stimulus
• US Dollar Gains as Stocks Sink in Overnight Trading
Critical Levels
The Euro fell 0.3% against the US Dollar, testing as low as 1.4978. The British Pound remained generally flat, consolidating in a narrow range above 1.6580.
Asia Session Highlights
Japan’s Merchandise Trade Balance surplus expanded to 520.6 billion yen in September from 183.3 billion in the previous month but fell short of economists’ expectations for a 620.8 billion result. The annual pace of contraction in exports continued to ease, down -30.7% from a year before, while imports fell -36.9% over the same period. Overseas sales of Japanese goods have rebounded since hitting a record low in January as governments around the world spent more than $2 trillion to bolster their economies while central banks aggressively cut interest rates amid the first global recession since the Second World War, boosting foreign demand. That said, exports are still well below pre-crisis levels and it remains uncertain whether positive momentum can be maintained after expansionary policy is withdrawn. A stronger currency may also weigh on export growth: the Yen added 5.3% through the third quarter, the first gain since the three months to December 2008, threatening to make Japanese goods comparatively more expensive and drive away foreign demand.
The US Dollar added 0.2% in overnight trading as stocks fell after outspoken Rochdale Securities LLC analyst Robert Bove downgraded Wells Fargo Bank, the largest US home lender, after the firm released what appeared to be a stellar of third-quarter earnings figures, saying the outcome was “unsustainable” and cautioning that “loan losses seem to be accelerating.” The news sent the MSCI Asian Pacific regional benchmark index down 1.3% ahead of the opening bell in Europe. Downward momentum was amplified after China said the economy grew at an annual pace of 8.9% in the third quarter, the most in a year, as traders began to worry that the Asian giant will need to tighten monetary conditions and scale back stimulus spending to avoid runaway inflation.
Euro Session: What to Expect
UK Retail Sales headline the calendar in European hours, with expectations calling for receipts to grow 0.5% in September. The annual pace of sales growth is set to rise to 2.8%. While certainly an improvement over the previous month’s result, the reading still falls firmly within the downward trajectory that has guided the metric lower since sales growth peaked in May 2008. This trend looks likely to remain in place as unemployment continues to rise: the jobless rate hit a 12-year high of 5% in September and is expected to top 9% by the second half of next year according to a survey of economists polled by Bloomberg. The immediate market-moving power of the release may be diminished following yesterday’s release of the minutes from the last meeting of the Bank of England: policymakers are clearly intent on waiting for November’s inflation report to make any significant changes to monetary policy, and governor Mervyn King has stressed that policymakers will look beyond short-term fluctuations in economic indicators as the economy works through a “bumpy” recovery and inflation remains volatile. To that effect, a marginal uptick in sales activity is unlikely to materially impact the bank’s view of the growth outlook and so will be of limited interest to currency traders.
Switzerland’s Trade Balance for September is also set for release, with traders looking for clues that the central bank’s deflation-minded policy of keeping a lid on the value of the Franc, particularly against that of the Euro, is having any positive spillover on the external sector. Over 60% of all Swiss exports find demand in Euro Zone markets.
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