Yen Rises as Carry Trade Suffers

The Japanese currency rose today on Forex during the Asian trading session as the stocks market drop spurred carry trade sell-offs and the liquidation of the yen-based high-risk assets.

The yen gained against Great Britain pound, U.S. and Australian dollars, while remaining relatively weak against the euro today. German Ifo report on business climate in the country was released today at 8:00 GMT strengthening the euro’s position with a better than expected index value for May.

Although the worries of recession and the worst financial market slumps are slowly fading in the investors’ field of view, the low-yielding currencies, such as yen and Swiss franc, are still seen as a safe haven, when markets are suddenly falling and $130/barrel oil prices threaten to hurt global growth.

The USD/JPY rate declined today for a second day straight — from 103.62 to 103.43 as of 8:33 GMT with a daily minimum at 103.14. GBP/JPY dropped from 203.86 to 203.46 with a daily low at 202.74. AUD/JPY was falling from 99.29 to 98.87 during the Forex Asian session today.

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EUR/USD Comes Closer to 1.6000

The U.S. dollar fell down to another historical minimum level against the euro today, as the strong technical resistance has been breached and the fundamental economic statistics in U.S. has failed to keep the USD up on the Forex market.

Apart from the bad data from the U.S. housing sector and the commercial crude oil inventories, additional fundamental pressure was applied on the dollar from the Eurozone CPI report today. Consumer prices grew 3.6% (year-to-year) in March there, eliminating the chances for the soon interest rate cut by the ECB.

From the viewpoint of the technical analysts, the current situation with EUR/USD on Forex isn’t surprising too. The euro tried to break the major support level around 1.5910 three times before today. And after it finally did it today, the currency pair soared to the new absolute maximum at 1.5968.

As of 15:48 GMT EUR/USD is trading near 1.5953 and is ready to climb to 1.6000. Thursday will be last day this week with the important U.S. economic releases, so it will be a very important day for the Forex traders, as it will probably show the strength of the current bullish trend on EUR/USD.

This entry was posted on Wednesday, April 16th, 2008 at 5:57 pm and is filed under Euro, U.S. Dollar. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

ForexGen provides its institutional clients with incomparable professional and individualized trading services. As a professional online trading service, ForexGen provides several facilities for all kinds of traders. Our corporate and managed trading service performance are based on respect and appreciation which is only achieved by offering intelligent high end trading tools for secure investment. ForexGen is the easiest and fastest gateway for the corporate traders to perform successful trading, which provides a unique institutional investor professional facilities and highly qualified individualized services for the international customer. ForexGen provides advanced online trading software with full corporate trading services. A rich choice of managed accounts are also available, please check our Managed Account Section

ForexGen delivers what traders want: instant order execution, lowest spreads, flexible starting capital, fast deposits and withdrawal, a local support in more than 18 countries, and most of all, solid funds security.

Winning in trading depends on using the right strategy and controlling all the moves. Trading strategies are discussed in details at ForexGen Academy.

USD Is Stronger Today

Usd was marginally stronger in Asian session however markets continued to discounted the G7 communiqué and stronger US Retail Sales. Asian equity markets continue to trade in the green and European equity futures look to open above fair value. A good sign for growing risk appetite and carry trades. ECB's Mersch commented yesterday that the ECB doesn't have much room to cut rates this year. Mercsch's statement was unexpectedly hawkish in comparison to Trichet increased emphasis on growth risks last week. This punctuates the fact that the ECB is still very much committed to price stability ahead of growth concerns. We expect the Eur to stay supported in the near term and will be looking for a test of 1.5910. In Europe markets will be focused on the German Zew survey which should provide additional evidence that financial market sentiment is improving. The DAX has been performing relatively well since March as economic news encouraged the Eur. Howeve, while its level is still elevated it has not appreciated further. In the UK today's highlight will be the release of the CPI and RPI figures. We expected both figures to creep up further which will complicate the BoEs dilemma further. Market will very much be poised to trade depending which way inflation is heading and how subsequent effect on interest rate will be affected. In the US Empire State index and NAHB will be the day's final focus. Both looking to continue downwards at the fundamentals in the US have not marketable improved.

ForexGen provides its institutional clients with incomparable professional and individualized trading services. As a professional online trading service, ForexGen provides several facilities for all kinds of traders. Our corporate and managed trading service performance are based on respect and appreciation which is only achieved by offering intelligent high end trading tools for secure investment. ForexGen is the easiest and fastest gateway for the corporate traders to perform successful trading, which provides a unique institutional investor professional facilities and highly qualified individualized services for the international customer. ForexGen provides advanced online trading software with full corporate trading services. A rich choice of managed accounts are also available, please check our Managed Account Section

ForexGen delivers what traders want: instant order execution, lowest spreads, flexible starting capital, fast deposits and withdrawal, a local support in more than 18 countries, and most of all, solid funds security.

Winning in trading depends on using the right strategy and controlling all the moves. Trading strategies are discussed in details at ForexGen Academy.

ForexGen steady in asian seasion today

Usd was firm in Asian session as the relief rally seen on Wall Street carried over to Asia equity markets. Market participants viewed the write downs by UBS and Deutsche as the start of a recovery process for the financial sector and gave risk appetite a lift. Commodity markets continued to slide as de-leveraging with gold remained on the the agenda of investors. Currently gold is trading around 890oz while crude, despite being afflicted by the de-leveraging, is still managing to hold above the important $100/bbl level. Overall the revival of global risk seeking environment has carry trades also outperforming.

Markets will be focused on Fed Chairman Bernanke's congressional testimony today and Thursday. Today he still speaking on the economic outlook before the Joint Economic Committee and Thursday he will be before the Senate Banking committee to alk about the financial turmoil. The accompaning statement that followed the most recent Fed cuts (75bp) had a hawkish tone and it will be interesting to hear any comments about inflation expectations. Undoubtedly today he will be bombarded with questions regarding Bears' rescue and wether the bailout went too far when the Fed decided to take on 29bn of troubled assets.

Bernakes' comments and recent market activity should overshadow the US ADP survey. However this figure will help build our expectations for Fridays nonfarm payrolls

ForexGen provides its institutional clients with incomparable professional and individualized trading services. As a professional online trading service, ForexGen provides several facilities for all kinds of traders. Our corporate and managed trading service performance are based on respect and appreciation which is only achieved by offering intelligent high end trading tools for secure investment. ForexGen is the easiest and fastest gateway for the corporate traders to perform successful trading, which provides a unique institutional investor professional facilities and highly qualified individualized services for the international customer. ForexGen provides advanced online trading software with full corporate trading services. A rich choice of managed accounts are also available, please check our Managed Account Section

ForexGen delivers what traders want: instant order execution, lowest spreads, flexible starting capital, fast deposits and withdrawal, a local support in more than 18 countries, and most of all, solid funds security.

Winning in trading depends on using the right strategy and controlling all the moves. Trading strategies are discussed in details at ForexGen Academy.