Dollar Retreats from Opening Gap Gain

The U.S. dollar has retreated from its impressive gain on this week opening on the Forex market and is now trading inside its usual recent daily bearish trend against the euro and the Japanese yen.

The G7 meeting’s officials noted the global situation with currency rates volatility and the necessity of the actions against the fast depreciation of some currencies and the fast appreciation of the other currencies. The presence of the currencies concern in the meeting conclusion spurred traders’ belief that the dollar may change its declining behavior on the currency market.

The week opened with a significant gap in the dollar’s favor on the EUR/USD currency pair. While Friday ended at 1.5807 for EUR/USD, today the pair opened at 1.5704 — a 0.65% gap. The only reason for such a fast and momentary shift in the trend was the G7 mentioning of the weak dollar danger.

Nevertheless, almost immediately after the trade session opening, the dollar bears started to prevail and the EUR/USD regained almost a full gap loss during the first 10 hours of trading, confirming a present long-term anti-dollar trend.

As of 8:58 GMT EUR/USD was trading at 1.5783 — about 0.5% above its opening level.

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ForexGen Presents Fundamental Headlines

• USDNZD – New Zealand retail sales fell 0.7% as rising food and energy costs sapped consumer spending power. The economy is slowing faster than policy makers had expected, when they raised rates to record levels, leading to calls for future rate cuts. For more news and resources, visit our New Zealand Dollar Currency Room. • GBPUSD – Prices at the factory gate rose 0.9% in March bringing the year-over year level to 6.2% -the highest since 1991. Discouraging for policy makers is prices rose in all ten measured categories led by energy. Therefore, The BoE may be hard pressed to continue cutting rates after their recent quarter point hike, unless growth levels continue to fall. Discuss the topic and your trade ideas in the GBP/USD Forum. • EURUSD – Eurozone industrial production exceeded expectations for another month as output increased 0.3% in March against expectations of 0.2%. The improvement underlines the ECB’s contention that the country can withstand the U.S. downturn without lowering their benchmark rate. In fact , council member Yves Mersch’s recently commented that there isn’t any room for the central bank to cut rates this year with inflation expected to remain above the 2% threshold into 2009. Discuss the topic and your trade ideas in the EUR/USD Forum.

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.

Rates cuts Still Viewed as the Linchpin to Growth

The Yen barely moved against the dollar after the BoJ's decision to leave interest rates at .5 per cent after yesterday's meeting. It rose only by 0.3 per cent. to Y102.25. Over the last few months the Yen came under pressure as the markets were getting a semblance of stability following the capital injection by central banks, especially following the Bear Sterns debacle. Analyst initially thought that the support given by macro financial institutions around the world would increase the appetite again for riskier investment. However this feeling seems to be subdued with the report published yesterday by the IMF suggesting that the the credit crisis might be costing à 945bn cutting short the risk appetite throttle.

The easing will therefore continue and put the dollar under pressure. Yesterday the minutes from the Federal Reserves March meeting revealed that there was still a dominante dovish sentiment among the governors. The US economy is certainly slowing at a faster rate than what Fed had expected along with the less than expected inflationary pressure. As a result the financial watchdog institution will in all probabilty continue along the lines of more cuts. The weaker dollar that will inevitably result will not affect this line of conduct. Around the globe the dollar came again under pressure, falling against teh Swiss franc to 1.006, against the the euro droping to $1.5775 and against the pound at $1.9750.

The dollar's decline is notwithstanding the gloom that is shrouding the UK economy as consumer confidence index dropped to a four year low. The BoE will no doubt cut the rates this afternoon as a result but this action has yet to prove to be a stimulatory factor.

The ECB on the other hand will in all probability keeps it's rate on par. President Trichet is still concerned over inflationary pressures that he feels will grip the Eurozone economy. The ECB council is using the latest CPI numbers, which jumped to 3.5 % in March, as the reason. We are yet to see however a clear stance on growth prospects. Many analyst still predict a rate cut to come possibly to 3 per cent by early next year. What the data clearly shows nonetheless is a clear decline in economic activity, a factor the Council will have to address at some point.

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.