EUR/USD Daily Fundamental Analysis for September 7, 2011
The heavy fluctuations and volatility were evident on the EUR/USD on Tuesday where the pair was affected heavily by the SNB intervention that offered good support for the euro yet still remained pressured by the prevailing pessimism and deepening debt woes. The euro rallied in the early hours on Tuesday after the SNB acted against the aggressive franc rally, and especially versus the euro, where the bank set the minimum exchange rate for the EUR/CHF at 1.20 and said will not tolerate the franc’s appreciation beyond that, assuring that the bank is prepared to buy foreign currency “in unlimited quantities”. With the move the relief rally and demand on the euro sent the pair higher and did also to equities yet was not a strong sentiment to support the lasting reversal as downside pressures persisted. The return of U.S. markets from a long labour Day holiday was very bearish on the market as rising growth and debt woes weighed on the market. Banking stocks suffered heavy losses in Europe on fear the deepening debt crisis will enforce heavy losses. Fears intensified after comments from Germany, where the finance minister Wolfgang Schaeuble said that Greece might not be acquiring further aid if the “troika” report was negative. The euro area has no data queued for release on Wednesday which leaves the focus on the rate decision on Thursday. As for the United States the data is light too with the Fed’s Being Book on the queue at 18:00 GMT. With the low flow of data and expected confirmation of slowing economic activity across federal districts will likely fuel the pessimism in the market as the woes are predominant and jitters will prevail until investors retain more assurances over the next tranche for Greece to ensure it avoids bankruptcy.
AUD/USD Daily Fundamental Analysis for September 7, 2011
The market has extended the decline amid concern the European debt crisis has a negative results on the Banks, which is making the borrowing process more difficult, increased the bad outlook for the global economic recovery. Moreover, the US dollar grabbed the attention, while it advanced sharply against major currencies (Euro, Aussie, Yen and Kiwi) as investors continue to seek haven amid growing global economic uncertainty. On the other hand, Aussie will remain under pressure as traders move into lower yielding ‘haven’ assets like the dollar after the news indicated that the German support for the European bailouts is dwindling. The Reserve Bank of Australia noted that interest rates decision is a prudent decision at this time amid the fears that dominate the market, while the investment sector is picking up which is a positive phase to push the economy to return once again to normal growth levels. On Wednesday, at 23:30 GMT (Tuesday) Australia will report the August AiG performance of construction index, while the July’s reading came out at 36.1. Moreover, the market is waiting the Australian gross domestic product reading for the three months ended June that will be released at 01:30 GMT, whereas the economic growth contracted by 1.2% during the first quarter and expected to have recovered with 1.0% expansion in the second three months of the year.
EUR/CHF Daily Fundamental Analysis for September 7, 2011
The EUR/CHF rallied heavily to the upside on Tuesday after the unexpected intervention from the Swiss National Bank which strongly weakened the franc. The SNB acted against the aggressive franc rally, and especially versus the euro, where the bank set the minimum exchange rate for the EUR/CHF at 1.20 and said will not tolerate the franc’s appreciation beyond that, assuring that the bank is prepared to buy foreign currency “in unlimited quantities”. The move strongly weakened the franc and sent the pair above 1.20 as the bank acted strongly to protect slowing growth and rising risks of deflation after August CPI declined further as data showed on Tuesday. For the coming period, we expect the pair to retain the upside momentum after the strong move from the SNB and we expect their rhetoric to grow stronger with the rising uncertainty and pressures in the market. On Wednesday, we expect the pair to continue to trade in the wake of the SNB move, especially with the lack of major data from both nations where the focus remains on Thursday’s ECB decision and the rhetoric from Trichet whether the bank turns dovish or not!
NZD/USD Daily Fundamental Analysis for September 7, 2011
New Zealand currency (the Kiwi) dropped to the lowest in more than a week amid concern Europe’s sovereign debt crisis and a slowing U.S. economy will dent global growth, damping demand for higher-yielding assets. Moreover, the New Zealand currency has reached to the lowest level in two weeks against the US dollar as Asian stock markets declined for a third day in a row, reducing demand of Kiwi. The market is moving into the hurdle phase as the fears dominate the investors’ sentiment, pushing them to increase the investment into the safe havens such as the greenback, gold and the Yen. There is no important fundamental data from New Zealand and the US on Wednesday which will leave the focus on the prevailing market sentiment.
USD/JPY Daily Fundamental Analysis for September 7, 2011
The USD/JPY pair advanced slightly early Tuesday in a correctional move, after it has been trading near its post-war levels for the last three weeks. However, the FX market witnesses some recovery movements before an expected slowdown in the U.S. service-industry. The greenback lost some of its previous gains against the euro and other major currencies early Tuesday, as investors decided to take some profits before the U.S. ISM Non-Manufacturing data, which is expected to show slowdown in the services sector in the U.S. economy. On the other hand, the Japanese yen’s traders are waiting for the BOJ meeting this week and its statement, trying to figure out the next action from the central bank, and whether it going to affect on the Japanese yen trading or not, especially after the SNB intervened again in the market and set the minimum accepted rate for the EUR/CHF at 1.20. On Wednesday, the Bank of Japan will release its interest rate decision, where it’s expected to stay near zero, while the bank statement will be the major market focus. The Coincident Index for July will released up at 05:00 GMT, where the preliminary reading is expected to come at 108.9 compare to the previous reading of 108.8. On the other hand, Japan’s leading index for July is expected to come at 105.9 from the previous reading of 103.2.
GBP/USD Daily Fundamental Analysis for September 7, 2011
On Tuesday, the pair showed bearishness, where the sterling fell to the lowest level since mid July against the greenback, as the tensions in markets that global recovery is fading enhanced demand on the dollar as a safe haven. Lackluster services data from China, euro area and U.K. released on Monday completed the grim picture drawn last week when manufacturing sector in major economies showed either ease in expansion or contraction in August. U.S. ISM services for August showed a widening expansion to 53.3 from the prior 52.7, yet it did not have a remarkable effect on the pair’s movements. On Wednesday, at 08:30 GMT, manufacturing and industrial production reports will be available. The U.S., on the flip side, will release MBA mortgage applications for September 2 at 11:00 GMT followed by Fed’s Beige Book at 18:00 GMT. U.K. data is expected to have an effect on the pair’s movements especially after the contraction seen in manufacturing sector in August, before the announcement of September’s rate decision later in the week.
USD/CAD Daily Fundamental Analysis for September 7, 2011
The USD/CAD pair rose on Tuesday amid rising concerns around markets over the outlook for global growth on signs major economies around the world are slowing, and the worsening outlook for the European debt crisis, as investors shunned risky assets and headed for lower yielding assets, which put negative pressure on the CAD, and pushed the USD/CAD pair to the upside. The uncertainty that continues to surround the outlook for global growth should continue to put downside pressure on the CAD, which will provide the USD/CAD pair with more bullish momentum. Nonetheless, traders will be following closely the rate decision by the Bank of Canada, where it’s expected that the BOC will leave rates unchanged. Wednesday September 07: The Bank of Canada will release the Interests Rate Decision, where it’s expected to leave the rate unchanged at 1.00%. Canada will also release the IVEY Purchasing Managers Index for the month of August at 14:00 GMT, where the index is expected to rise to 55.0, compared with the previous reading of 486.8 in July. At 18:00 GMT the United States will release its Fed’s Being Book, which will help shed some light over the recent economic developments in the United States.
USD/CHF Daily Fundamental Analysis for September 7, 2011
On Tuesday, the U.S. dollar rose sharply against the Swiss franc after the Swiss National Bank (SNB) said it will set a ceiling for the franc exchange rate against the euro and pledged to defend this target with the “utmost determination” if needed. The SNB said “with immediate effect, it will no longer tolerate a euro-franc exchange rate below the minimum rate of 1.20 francs. The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities.” This step, which came after several monetary interventions last month, pushed the franc down against majors, thereby pushing the USD/CHF pair to the upside to pare more than the drop witnessed in the previous four sessions. The Swiss bank sees that the franc’s appreciation is weighing Swiss exporters and raising concerns about deflation risks. Data released on Tuesday showed that annual CPI for August dropped to 0.2% from the prior 0.5% while the monthly reading slipped 0.3% from the previous 0.8% drop. On the other hand, U.S. ISM services for August showed a widening expansion to 53.3 from the prior 52.7, making the dollar to surrender some of the gains. On Wednesday, while the Swiss economy lacks fundamentals, theUSwill release MBA mortgage applications for September 2 at11:00 GMT followed by Fed’s Beige Book at 18:00 GMT. The pair is predicted to continue its rise after the bank’s vow to defend its policy where the dollar and yen may become more attractive as safe havens.;
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