News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Gold
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Mixed
More View more
Real Time News
  • The London trading session accounts for around 35% of total average forex turnover*, the largest amount relative to its peers. The London forex session overlaps with the New York session. Learn about trading the London forex session here: https://t.co/UTWxbnNz7M https://t.co/W9awqb818J
  • There is a great debate about which type of analysis is better for a trader. Is it better to be a fundamental trader or a technical trader? Find out here: https://t.co/aVAzFypAg1 https://t.co/lucvsACxu5
  • There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Learn about the characteristics of each session here: https://t.co/UVvf51HiVP https://t.co/yywnE39MLU
  • The US Dollar is losing ground against ASEAN FX, with USD/SGD and USD/IDR possibly readying to extend declines. Will USD/PHP and USD/MYR follow? Find out from @ddubrovskyFX here: https://t.co/l705RWumj5 https://t.co/jBbMKYp0F5
  • There are many different types of forex orders, which traders use to manage their trades. While these may vary between different brokers, there tends to be several basic FX order types all brokers accept. Learn about different FX order types here: https://t.co/lIJdiz4xSz https://t.co/YUhC9cCDpy
  • The US Dollar has spent much of October giving back September’s gains. Is there any hope for change? Get your #currencies update from @JStanleyFX here: https://t.co/3EHa6PV5yH https://t.co/PrP9J2klJk
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/UalZ8cRSXB https://t.co/wDVd2QvcjO
  • The longer-term EUR/USD outlook will hinge on Thursday’s ECB guidance; any hint of a further easing of Eurozone monetary policy would weaken it, but that is far from guaranteed. Get your #currencies update from @MartinSEssex here: https://t.co/RmHCfIwdqp https://t.co/hvETa6mtft
  • Traders tend to overcomplicate things when they’re starting out in the forex market. This fact is unfortunate but undeniably true. Simplify your trading strategy with these four indicators here:https://t.co/A4dqGMPylo https://t.co/M8WTvZgx2K
  • The Australian Dollar was under selling pressure this past week, but it held its ground. Bearish patterns brew in AUD/USD and AUD/JPY. Will EUR/AUD, GBP/AUD try to break higher again? Get your #currencies update from @ddubrovskyFX here: https://t.co/04kzJSqgNG https://t.co/ulPk1UneMM
Euro Slides as Japanese Yen and US Dollar Make Comeback Post-Bernanke

Euro Slides as Japanese Yen and US Dollar Make Comeback Post-Bernanke

2012-06-08 14:12:00
Christopher Vecchio, CFA, Senior Strategist
Share:

Fundamental Headlines

- Obama Seeking Ally on Europe Finds Merkel a Tough Sell – Bloomberg

- Rajoy Holds Bank Talks with EU as Fitch Downgrades Spain – Bloomberg

- Spain to Request EU Bank Aid on Saturday – Reuters

- Europe’s Vulnerable East Braces for Possible Greek Exit – WSJ

- No Hint from the Fed of Taking New Steps – WSJ

Asian/European Session Summary

Yesterday I wrote, “When was the last time a Fed Chairman announced the plans for a major stimulus package at a Congressional testimony?” This indeed was the case, with Federal Reserve Chairman Ben Bernanke shifting away from the ultra-dovish tone that was expected by market participants and instead he continued to march to the beat of his own drum. Chairman Bernanke has spent the past several months emphasizing transparency and greater credibility at the Fed, and to think that a smattering of disappointing data prints would force a 180 degree turn in Fed policy – and thus diminishing the Fed’s credibility – seemed (and still seems) a little misguided. Thus, for now, quantitative easing remains a possibility, and as always, it will only come if it is absolutely economically necessary – a condition which hasn’t been met yet.

Price action in the overnight sold the “QE trade,” in such that market participants broadly shed higher yielding currencies and risk-correlated assets in favor of the US Dollar. With little important data due from either Asia or Europe (save the better than expected Japanese first quarter GDP reading), there was little reason to move into anything else than the Japanese Yen and the US Dollar, the top two performing currencies thus far on Friday.

Leading the weakness has been the Euro, which is under pressure following reports that Spanish Prime Minister Mariano Rajoy will meet with European Union officials over the weekend to request a bailout for his country’s ailing banking sector. While the Euro initially found strength on this news (the EURUSD rallied approximately 30-pips following the report), it soon sold off quickly and is sitting near session lows just after the US cash equity open. Let’s be clear: a bailout of Spain – one which was deemed unimaginable by the European leadership bloc – suggests that the crisis is now free to spread into the core. Primarily, this would amount to concerns over Italy arising, and with technocratic Prime Minister Mario Monti losing influence in his government, we may just yet be seeing the next leg of the crisis unfold.

Taking a look at credit, the Spanish bailout news and the implications of the crisis spreading to Italy have weighed heavy on periphery debt, but really, only for Italian and Spanish bonds. The Italian 2-year note yield rose back to 3.885 percent while the 10-year note yield climbed back to 5.784 percent; and the Spanish 2-year note yield and the 10-year note yield rose back to 4.194 percent and 6.185 percent, respectively. Elsewhere, Portuguese debt has improved across the board, while it’s worth noting that the US 10-year Treasury Note yield has fallen back to 1.578 percent.

EURUSD 5-min Chart: June 8, 2012

Euro_Slides_as_Japanese_Yen_and_US_Dollar_Make_Comeback_Post-Bernanke_body_Picture_11.png, Euro Slides as Japanese Yen and US Dollar Make Comeback Post-Bernanke

Charts Created using Marketscope – Prepared by Christopher Vecchio

The Japanese Yen has been the top performer today, with the USDJPY depreciating by 0.28 percent. The Euro has been the worst performer as discussed earlier, shedding 0.81 percent against the US Dollar (the Swiss Franc is also weaker alongside the Euro, having dropped by 0.81 percent). The commodity currencies are also weaker across the board, with the Australian Dollar leading losses, down 0.46 percent.

24-Hour Price Action

Euro_Slides_as_Japanese_Yen_and_US_Dollar_Make_Comeback_Post-Bernanke_body_Picture_8.png, Euro Slides as Japanese Yen and US Dollar Make Comeback Post-BernankeEuro_Slides_as_Japanese_Yen_and_US_Dollar_Make_Comeback_Post-Bernanke_body_Picture_2.png, Euro Slides as Japanese Yen and US Dollar Make Comeback Post-Bernanke

Key Levels: 14:00 GMT

Euro_Slides_as_Japanese_Yen_and_US_Dollar_Make_Comeback_Post-Bernanke_body_Picture_5.png, Euro Slides as Japanese Yen and US Dollar Make Comeback Post-Bernanke

Thus far, on Friday, the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) is trading higher, at 10232.24 at the time this report was written, after opening at 10198.32. The index has traded mostly higher, with the high at 10242.97 and the low at 10198.26.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, send an e-mail with subject line "Distribution List" to cvecchio@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES