UFXBank Daily News: Yen Rises on Mideast Tensions

Posted by admin on February 24, 2011 under forex market | Be the First to Comment

USD Dollar (USD) – The Dollar fell against most of the other major currencies in Forex trading, despite the social unrest in the Middle-East. This was due to strengthening of the Pound and Euro on speculation that the European Central Bank and the Bank of England will seek to cap inflation by raising interest rates before the Federal Reserve. The Fed has kept its key rate at zero to 0.25 percent since December 2008 to support the economic recovery and it seems that this policy will be continued for now. The NASDAQ and Dow Jones fell for the second day, weakening by 1.21% and 0.88% respectively as a result of a large concern that higher energy prices will slow economic growth. Crude oil continued to surge by reaching $100 a barrel, owing to the situation in Libya. Crude orders strengthened by 6% and closed at $99.10 a barrel. Gold (XAU) strengthened by 0.7%, closing at $1411.75 an ounce as escalating political instability in the Middle East and North Africa boosted investor demand for safety assets. Today, Core Durable Goods Orders are expected to weaken from 0.8% to 0.4% and Unemployment Claims are expected to improve from 410K to 403K.

Euro (EUR) – The Euro rose against the Green back on speculation that the ECB will be hiking rates sooner-than-expected. This comes as Bank President Trichet said today, that the ECB policymakers will take the necessary actions to maintain price stability.  If the pair will break its resistance at 1.3775, we will be witness to the levels we had seen in November 2010. The EUR/USD momentum is bullish as long as the rate is above 1.3750. If the pair breaks below this level, the Euro will probably decline to 1.3680. Overall, EUR/USD traded with a low of 1.3526 and with a high of 1.3775. No major economic data is expected today.

EUR/USD – Last: 1.3750

British Pound (GBP) – The Pound rose against the Dollar due to speculation that the BOE will be hiking rates sooner-than-expected and before the Federal Reserve. The GBP/USD’s main resistance at 1.6250 didn’t break. As long as the pair is trading below 1.6250, it may once again test its support at 1.6180. Overall, GBP/USD traded with a low of 1.6101 and with a high of 1.6273. Today, CBI Realized Sales are expected to weaken from 37 to 30 .

GBP/USD – Last: 1.6219

Japanese Yen (JPY) –The Yen rose against other major currencies on speculation that tensions in the Middle East and North Africa will worsen, boosting demand for the Yen as a refuge. The USD/JPY has broken the support level at 82.50, and therefore the momentum is still bearish for the US Dollar. As long as the rate is below 82.50, a short position is preferred. Overall, USD/JPY traded with a low of 82.30 and with a high of 83.42. Japan’s Trade Balance showed its first deficit since April 2009. BOJ Yamaguchi told reporters that deflation seems to be easing. No economic data is expected today.

USD/JPY-Last: 82.59

Canadian dollar (CAD) – The Canadian Dollar rose against the US Dollar as escalating violence in Libya increased oil prices. In addition, the weakness of the US Dollar against most currencies gave a signal to advance for the Canadian Dollar.  The USD/CAD’s resistance is located at 0.9925, and if the pair breaks above this level, the momentum becomes bullish. Overall, USD/CAD traded with a low of 0.9857 and with a high of 0.9958. No major economic data is expected today.

USD/CAD – Last: 0.9884