Dollar mostly weaker ahead of Fed and Other Top Forex News

Tuesday, April 30, 20130 comments

The dollar was mostly weaker in a topsy turvy day of trading, as official data showed that U.S. consumer spending rose 0.2% in March, above expectations for a modest 0.1% increase, and pending home sales hit their highest in three years.
The news was tempered however by continued sentiment that the Federal Reserve’s monetary stimulus programs will stay in place for longer than expected, after Friday’s GDP data missed expectations. The Fed will announce its decision on interest rates and monetary policy on Thursday.
More Coverage of the Day’s Top Story
  • UPI: U.S. at risk of double-dip recession. – The U.S. Commerce Department reported that consumer spending advanced 0.2 percent in March — much weaker than the 0.3 percent and 0.7 percent registered in January and February. Extraordinary year-end bonuses and dividends — intended to dodge higher taxes in January — boosted consumer activity in January and February but now households are hunkering down. Much weaker consumer spending is expected for the second quarter as the $120 billion January hike in payroll taxes and $45 billion increase in income taxes borne by the wealthy weakens household finances.
  • CNBC: Has the yen hit bottom against the dollar already? – A 2 percent rise in the yen’s value since Friday has some currency analysts calling a top on dollar-yen, just days after the currency pair looked poised to break through the key 100-barrier.
More Top Stories:
Bloomberg: Dollar weakens against euro on bets Fed to maintain bond-buying. – The dollar fell for a second day versus the euro before the Federal Reserve opens a two-day meeting tomorrow amid bets it will maintain bond purchases under quantitative easing for the foreseeable future.
JF Global Investing: Why the Yen will move lower and the Nikkei will move higher. – In what has been one of the most popular (and crowded) trades over the past six months, the short yen, long Japanese equities has delivered significant returns for investors. The Bank of Japan or BOJ has, in conjunction with the rest of the government, embarked on a plan to end deflation in Japan. The plan, which many have named “Abenomics” after PM Shinzō Abe, is incorporating both expansionary fiscal and monetary policy. Japan is targeting a return to 2% annual inflation within two years, which is a tremendous feat for an economy that has been in a deflationary mode for so long.
MarketWatch: Shorting the Aussie is the ‘trade of the century’. – The Australian dollar has traded above $1.00 all year and last dipped below that level in the summer of 2012. But that might not last for long. Paul Gambles, a managing partner at MBMG International, said Monday he thinks the Aussie dollar is headed for a correction that could push it to as low as 60 cents against the greenback within 18 months.
BusinessWeek: Pound rises to 10 week high against the dollar. – The pound strengthened to a 10-week high against the dollar as an industry report showed U.K. house prices increased this month, boosting optimism the recovery is gathering momentum.
Emil Mark: EUR/USD: The week ahead. – Although Wednesday is a non-working day in Europe, the current week presents an increased amount of economic data compared to the previous one.
Winnipeg Free Press: Canadian dollar rises alongside commodities, traders look to key data. – The Canadian dollar advanced Monday as the American greenback weakened against a variety of currencies and commodity prices moved higher. The loonie rose 0.33 of a cent to 98.67 cents US amid positive economic data from Canada’s largest trading partner.
FT Alphaville: The loss of simple narratives in FX. – An existential cry has been sounded once again in the world of FX which has suddenly been reduced to trading short term signals in a fickle market. Shocking. Gone are the days of simple carry, Risk on-Risk off and easy reifying market stories. And it seems they are missed, almost as much as they were once bemoaned.
DailyFX: The coming week could be huge. – Directionless forex market price action has proven frustrating, but the week ahead promises significant volatility on potentially pivotal US Federal Open Market Committee (FOMC) and European Central Bank (ECB) interest rate decisions. Top-tier event risk continues through Friday’s US Non farm Payrolls report, and it’s little exaggeration to claim that the coming days could define the following month of US Dollar price action.
Bloomberg: Gold futures rise on Fed stimulus bets. – Gold futures rose on speculation that the Federal Reserve will maintain bond purchases to bolster the U.S. economy, while demand for coins and jewelry climbed. Platinum jumped the most in 10 months.
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