Eur/usd

[Tiger21]

Yesterday the Fed pledged to keep interest rates in the US low and as a result we should see investors continue to use the dollar as a funding currency for riskier currencies and other assets. It also stated that there are signs that the US economy is improving, providing further cause for investors to pursue riskier assets. Although the dollar pulled back by the end of trading yesterday, it did hit a new high of $1.4845. I’m still long the dollar and I see it going to $1.50. The ECB is starting to get concerned about the strength of the euro, but it hasn’t intervened in the past at these levels.

 

[Tiger21]

Strong EU and US data this morning should continue the EUR on its upswing vs. the USD. In the US: initial jobless claims unexpectedly decreased to 530k last week and in Germany, Europe’s biggest economy, it is lowering its planned 4th quarter issuance of debt by 22% because of a reduction in funding needs. The adjustment is because of improved funding conditions and reduced borrowing requirements. The euro continues to increase this morning and I expect further upside.

 

[Nancy Cheah]

For this coming calendar week, I believe that it'll post a low of 1.46 nett and a high of 1.485 nett.

Regards.

 

[Tiger21]

Citigroup says that the dollar’s weakness will probably slow as it has bounced off support levels and failed to extend beyond resistance levels. I would consider taking this trade off for the short-term, even though I am bearish on the dollar long term.

 

[Tiger21]

The US data disappointed yesterday with the consumer confidence number coming in lower than expected causing losses in US equities and a rally in the USD. A breach of the support level in the $1.45 to $1.453 area will be difficult. The employment number will be important, but I expect that employers cut fewer jobs and think the dollar will continue to show weakness. Investors are waiting for positive data to continue to sell dollars and improving job figures would boost that risky appetite. Also, Fed Chairman Kohn is expected to reiterate the need for low interest rates in the US for an extended period of time. I’m monitoring these two data points today.

 

[Tiger21]

The dollar’s share of foreign currency reserves fell to its lowest level since the introduction of the euro in 1999. It share is now 62.8% while the euro gained to 27.5%. The dollar obviously is still the main reserve currency, but we are seeing diversification, albeit slowly. Increased willingness by foreign countries to hold the euro will provide for euro strength and dollar weakness long term. The US market is down this morning on the purchasing report concerns, but Lockhart reaffirmed the Fed’s need to keep the status quo in the monetary arena – probably helping to prop up the euro’s continued strength. Looking at employment numbers today and then monitoring for tomorrow: 02:30 SW Sep manufacturing PMI; 04:00 NO Sep unemployment; 04:00 EZ Sep-F manufacturing PMI; 04:30 UK Sep manufacturing PMI; 05:00 EZ Aug unemployment; 05:00 GE Aug retail sales; 08:30 US initial claims and Aug personal income/spending; 10:00 US Sep ISM & Aug construction; afternoon US Sep vehicle sales; 19:30 Aug JP jobless rate.

 

[Tiger21]

Euro is still stronger on the day despite a weaker than expected ADP number – private sector job loss was 254k vs. the 240k survey estimate. Possible rationale is the Q2 GDP was revised upwards to a loss of 0.7% vs. the previously stated 1%.

 

[Nancy Cheah]

For this calendar week, I reckon that a low of 1.45 nett and a high of 1.475 nett is on the cards.

Regards.

 

[Tiger21]

The language coming out of the G-7 wasn’t especially critical or harsh against the dollar weakness and volatility – as such I’d expect continued dollar weakness. French Finance Minister Lagarde, ECB President Trichet and US Treasury Secretary Geithner all expressed the need for a strong dollar, but this statement was weaker than the one released in April 2008. With the recent strength in the dollar, I’m buying euros relative to the dollar.

 

[forexbullet]

expects eur/usd to hit 1.55 by year end

Thomas Harr, fx strategist expects eur/usd to hit 1.55 by year end..

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