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Dollar Consolidating Ahead of FOMC

By , September 17, 2014 6:30 am

The all-seeing eye on top of pyramid on one-dollar billThe US dollar is consolidating right now, moving slightly lower ahead of today’s expected Federal Reserve announcement.

For the most part, Forex traders are in wait and see mode, waiting to see what Fed Chair Janet Yellen has to say about US monetary policy. Many traders are interested to learn whether or not she will provide any new hints about when interest rates might rise.

The US economy has been improving slowly over the last few years, and policymakers have been scaling back some of the quantitative easing issues. However, concerns about China, and uncertainty about geopolitical issues could very well prompt policymakers not to take steps that are too drastic as they move forward.

How the US dollar performs relative to other currencies is likely to be impacted by Yellen’s comments today, along with the influence of other factors, including Scotland’s upcoming independence vote, the situation in the Middle East, and sanctions against Russia.

At 10:47 GMT the US dollar index is a little bit lower, moving down to 84.0530 from the open at 84.0950. EUR/USD is only slightly higher, moving up to 1.2962 from the open at 1.2960. GBP/USD is higher as well, heading up to 1.6306 from the open at 1.6277. USD/JPY is up to 107.3195 from the open at 107.1275.

If you have any questions, comments or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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NZ Dollar Reverses Gains as Current-Account Deficit Widens

By , September 16, 2014 7:37 pm

Many 100-dollar billsThe New Zealand dollar dipped, reversing yesterday’s rally, as a report released today revealed that the nation’s current account deficit widened last quarter. It was the first decline this week after two sessions of gains.

New Zealand’s current account balance demonstrated a gap of NZ$ 2.0 billion in the June quarter, up from NZ$ $ 1.4 billion in the March quarter. On an annual basis, the deficit shrank from 2.7 percent to 2.5 percent of gross domestic product.

The kiwi was rising together with its counterparts against the US dollar at the start of this week. Unlike some other commodity currencies, it was unable to maintain rally. The New Zealand dollar entered a downtrend at the end of July after the Reserve Bank of New Zealand announced a pause in the interest rate hike cycle, eroding support for the currency and making it vulnerable to any negative news.

NZD/USD dropped from 0.8200 to 0.8175, and NZD/JPY declined from 87.84 to 87.61 as of 2:36 GMT today. EUR/NZD advanced from 1.5798 to 1.5844.

If you have any questions, comments or opinions regarding the New Zealand Dollar, feel free to post them using the commentary form below.

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Canadian Dollar Keeps Huge Gains

By , September 16, 2014 7:35 pm

Canadian coins on Canadian dollar billsThe Canadian dollar was little changed today following yesterday’s big jump. The rally was caused by both domestic fundamentals and developments on the global markets that were largely beneficial for the loonie.

Canadian manufacturing sales jumped 2.5 percent in July to a new record. Bank of Canada Governor Stephen Poloz voiced hope for revival of exports, particularly energy products. As an echo of such outlook, prices for crude oil, the major Canada’s export commodity, rose to the highest level in two weeks.

The Canadian currency was also riding higher on the back of the US dollar’s weakness. The greenback retreated as market participants started to speculate that the monetary policy statement, released today by the Federal Reserve, will not be especially hawkish, keeping the pledge to maintain interest rates low for a “considerable time”.

USD/CAD traded at about 1.0980 as of 1:58 GMT today after sinking from 1.1054 to 1.0968 at the previous trading session. EUR/CAD was near 1.4221 following the slump from 1.4304 to 1.4214. CAD/JPY traded at 97.67, close the highest level since January 7, at the current session after jumping from 96.94 to 97.65 yesterday.

If you have any questions, comments or opinions regarding the Canadian Dollar, feel free to post them using the commentary form below.

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Dollar Backs Off After Mixed Data

By , September 15, 2014 9:51 pm

Many US hundred-dollar billsThe US dollar backed off today against its major peers, but the losses for the most part were not as big as yesterday’s gains. As an exception, the greenback closed flat versus the Japanese yen on Monday and sank today.

Monday’s data from the United States was mixed, and it perhaps played a role in the halt of the dollar’s rally. While the Empire State Manufacturing Survey was very good, saying that “business activity expanded at a robust pace for New York manufacturers”, data about industrial production and the capacity utilization rate was worse than expected.

The Forex market is often sentiment-driven, and it becomes especially apparent ahead of some important event like this week’s monetary policy announcement from the Federal Reserve. Traders react to any piece of news they get, sometimes resulting in unexpected and volatile moves on the market.

In case of the dollar, the negative part of yesterday’s data damaged bulls’ confidence a bit but did not erase it completely. The greenback is currently actually attempting to reverse its losses, and there is a possibility that the currency will resume its rally.

EUR/USD ticked up from 1.2940 to 1.2948 as of 2:45 GMT today. GBP/USD rose from 1.6232 to 1.6240. USD/JPY slid from 107.18 to 107.02, touching the daily low of 106.93.

If you have any questions, comments or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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Dollar Retains Strength Ahead of FOMC Week

By , September 13, 2014 11:34 pm

Great Seal of the United States on one-dollar billThe US dollar demonstrated somewhat mixed performance this week but retained its strength for the most part. Many market analysts consider this as a sign that traders are strongly convinced in inevitability of an interest rate hike from the Federal Reserve.

While some analysts were not sure if the dollar would be able to maintain its rally, the currency continued to rise against most of its major peers. The notable exception was the Great Britain pound that reversed its losses and managed to gain over the week. The euro also bounced after reaching multi-year lows, ending the week flat.

On the other hand, commodity currencies, including the Australian and the New Zealand dollars, were very weak. The Japanese yen also continued to fall to new multi-year lows.

All in all, the greenback retained its strength, and dollar bulls wait eagerly for the Fed meeting in hopes that comments of the central bank will reinforce their optimistic outlook.

EUR/USD closed at 1.2948 after opening at 1.2955 and reaching the weekly low of 1.2859. GBP/USD fell from 1.6168 to 1.6052 during the week but bounced to 1.6258 by the weekend. USD/JPY advanced from 105.02 to 107.34.

If you have any questions, comments or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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China Daily: “Western Sanctions Will Make Moscow Back The Chinese Yuan Against The Dollar”

By , September 12, 2014 10:58 pm

China Daily: “Western Sanctions Will Make Moscow Back The Chinese Yuan Against The Dollar”
By: Zerohedge on: 12.09.2014 [15:12 ] (182 reads)

China Daily: “Western Sanctions Will Make Moscow Back The Chinese Yuan Against The Dollar”

Submitted by Tyler Durden on 09/12/2014 09:21 -0400

Op-Ed posted in China Daily

West’s Antics Pushing Russia closer to China

The recent NATO summit in Wales, held against the background of the armed conflict in Ukraine, has brought back the Cold War atmosphere to Europe. NATO’s partnership with Russia remains formally suspended. In fact, NATO is treating Russia more as an adversary than a partner.

The alliance is setting up a “Rapid Reaction Force” to deal with emergencies on Europe’s eastern flank. The alliance’s military infrastructure is moving toward that exposed flank, and closer to Russia’s borders. NATO forces will now spend more time exercising in the east, and their presence there will visibly grow. NATO-leaning Ukraine, which the alliance alleges is an object of “Russian aggression”, has been promised financial and military support.

The Ukraine crisis is not just about Eastern Europe, it is also about the world order. The Kremlin is seeking Washington’s recognition of what it regards as its core national security interest: keeping Ukraine as a buffer zone between Russia and the West, particularly NATO. Washington, on principle, denies Moscow this “imperial privilege”, and insists on the freedom of all countries, including Ukraine, to choose alliances and affiliations.

The stakes are high. Should Russia be rolled back in Ukraine, not only will its international position materially suffer, but also the power of the Kremlin inside the country might be dangerously undermined. On the other hand, if the US were to eventually accept Russia’s demand for a “zone of comfort” along its borders, Washington’s credibility as the global dominant power, the norm-setter and arbiter will suffer.

The Shanghai Cooperation Organization, of course, is no military alliance, and even less a rival of NATO. Its member states, however, are closely watching the US-Russian match being played out at the western end on the great Eurasian continent. Some, like the Central Asian states, are essentially ducking, hedging, or running for cover. China, which seeks to defend its own core interests in East Asia and the Western Pacific, looks at the current Russian-American competition through the prism of its own relations with Washington and Moscow.

China has a very important relationship to keep with the US. Playing a long game, Beijing usually avoids direct collisions with Washington, and means to profit from the US-initiated globalization to the fullest extent possible. Like Russia, however, China would also want to carve out a comfort zone for itself along its eastern borders and shores, and, like Russia again, it faces the reality of the US’ physical presence and US-led alliances there. What Washington is now doing in an effort to contain Moscow in Eastern Europe provides important information to Beijing in East Asia.

There is more to Beijing’s reaction than just watching and drawing conclusions. The apparently long-term rupture of Russia’s relations with the West offers an opportunity to the Chinese leadership to enhance its already close relationship with the Kremlin and thus turn the global geopolitical balance in its favor – not unlike former US president Richard Nixon and former secretary of state Henry Kissinger who reached out to Chairman Mao Zedong in 1972. The Russians, angry with Washington, are now more amenable to giving China wider access to their energy riches and their advanced military technology. The Western sanctions pushing Russia out of the international financial system are also making Moscow more ready and willing to back the Chinese yuan against the US dollar.

A Sino-Russian military alliance against the US is still a rather long shot. Yet the two countries’ political, economic and military alignment is getting thicker. An expellee from the G8, which is now back to G7, Russia is now eagerly embracing the non-West, particularly in Asia and Latin America. Within the non-West, China is unquestionably the premier power. Managing Russia will not be easy for anyone, but the country is a precious resource for China. So far, Beijing has displayed more tact in dealing with Moscow than any other major player in the world. Building on this success, it can now set its bar higher.

To a China which is rising and raising its global profile, BRICS is an asymmetrical equivalent of the G7, albeit in a very different shape and form. The SCO, to use a similar analogy, is an asymmetrical analogue to NATO, but as a political organization of continental Asia (including Russia), rather than a military bloc. The inclusion of India and Pakistan into the SCO is a logical next step. Iran, currently an observer, can follow later. Turkey, an SCO dialogue partner and a member of NATO, can become a useful link to the North Atlantic alliance.

Enhancing the SCO’s security credentials and extending its reach requires a major qualitative upgrade of China’s strategic thinking and diplomacy, and an even closer partnership with Russia. The SCO summit in Dushanbe, Tajikistan, will probably not see this yet, but it might become a point when the balance of Eurasia has decisively turned in China’s favor. Beijing would need to thank Washington for it.

Indeed, “thanks Obama” for firmly cementing the anti-western military, monetary and political alliance. (en) RSS feed for articles and news

NZ Dollar Ends Week Very Soft

By , September 12, 2014 12:13 pm

50 and 100 New Zealand dollar billsThe New Zealand dollar was extremely soft this week, and the current trading session was not an exception. The currency fell against its major peers even though economic data from New Zealand was rather positive.

Business NZ reported that the seasonally adjusted manufacturing Purchasing Managers’ Index rose from 53.5 in July to 56.5 in August. It was the strongest level in five months. The report noted that the manufacturing sector was expanding every month for the past two years.

The New Zealand currency did not react to the good news, most likely because its attractiveness was hurt by yesterday’s monetary policy announcement from the Reserve Bank on New Zealand. As was expected, the central bank kept its main interest rate at 3.5 percent, saying that “it is prudent to undertake a period of monitoring and assessment before considering further policy adjustment”. At the same time, the statement predicted that “some further policy tightening will be necessary to keep future average inflation near the 2 percent target mid-point and ensure that the economic expansion can be sustained”.

NZD/USD fell from 0.8181 to 0.8167 as of 17:02 GMT today, and its intraday low of 0.8145 was the lowest since February 4. EUR/NZD climbed from 1.5789 to 1.5886, while NZD/JPY slipped from 87.61 to 87.51.

If you have any questions, comments or opinions regarding the New Zealand Dollar, feel free to post them using the commentary form below.

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Canadian Dollar Pulls Back a Bit After Housing Starts Data

By , September 11, 2014 3:32 am

LooniesThe latest housing starts data was a bit disappointing, and the result offset some of the better news out of Canada about building permits. Concerns about the housing market continue to weigh, and the continued pressure on oil prices isn’t helping the loonie, either.

Loonie is a little bit lower against many of its counterparts today, thanks to the latest housing data. While the losses are quite tiny, they are still there, and a lot of it has to do with the fact that housing starts came in below expectations.

The disappointment in housing starts couldn’t quite be overcome by the reports from Statistics Canada that building permit growth beat expectations. There are a lot of jitters in the market right now, and that makes it difficult for the loonie to gain the upper hand.

Canadian dollar is also under pressure from oil prices. Once again, oil prices are lower today. Loonie is a commodity currency connected to oil, and dropping prices don’t do much to provide support. Other jitters are resulting from the upcoming Scottish independence vote.

At 10:16 GMT USD/CAD is up to 1.0988 from the open at 1.0937. EUR/CAD is also higher, gaining to 1.4196 from the open at 1.4128. GBP/CAD is up to 1.7843 from the open at 1.7730.

If you have any questions, comments or opinions regarding the Canadian Dollar, feel free to post them using the commentary form below.

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Interest Rate Hike Bets Continue to Support Dollar

By , September 10, 2014 4:39 pm

A sheet of new hundred-dollar billsThe US dollar continued to move upward with help of speculations about an eventual increase of interest rates by the Federal Reserve. The greenback reached the strongest rate in six years versus the Japanese yen. Surprisingly enough, the currency dipped versus the Great Britain pound, which was unexpectedly strong at today’s trading session.

Forex market participants continue to speculate about possible timing of Fed’s interest rate hike. The general consensus is that the US central bank will drop its-asset purchase program in October and start monetary tightening in mid-2015. With relatively uneventful week in terms of economic data from the United States, there is little to change this outlook in one way or the other.

The next Fed policy meeting is scheduled on September 17. It should be an important event as it will be accompanied by press-conference and economic projections.

EUR/USD ticked down from 1.2939 to 1.2922 as of 23:13 GMT today. USD/JPY soared from 106.19 to 106.86, touching the highest level since September 2008. At the same time, GBP/USD advanced from 1.6104 to 1.6203, bouncing from the low of 1.6052 — the weakest rate since November 15.

If you have any questions, comments or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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Australian Dollar Makes Way Lower with Consumer Sentiment

By , September 10, 2014 5:48 am

Australian dollar billsThe Australian dollar declined today, falling for a third consecutive session versus its US peer, after the release of the Westpac — Melbourne Institute Survey of Consumer Sentiment that demonstrated decline of consumer confidence in Australia.

The Westpac — Melbourne Institute Index of Consumer Sentiment fell by 4.6 percent in September from August. Westpac’s Chief Economist Bill Evans commented on the reading:

This is a surprising and disappointing result.

He added:

In effect most of the steady recovery we had seen in the Index over the last 3 months has been eroded.

AUD/USD fell from 0.9203 to 0.9141 as of 11:53 GMT today, and its daily low of 0.9113 was lowest March 24. AUD/JPY dropped from 97.72 to 97.47.

If you have any questions, comments or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

Earlier News About the Australian Dollar:

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