| Global Interest Rates | |||
 Australia |
7.25% | ||
 Canada |
3.5% | ||
 EMU |
4% | ||
 Japan |
0.5% | ||
 Swiss |
2.75% | ||
 England |
5% | ||
 US |
2.25% | ||
Forexperts
Bad U.S. Economic Data Helps Trigger Euro Rally
Commodity Trading Advisor registered with the National Futures Association
A Sell-Off in U.S. Equities May Prompt a Rally in the Yen
Equity markets initially sold off on the Fannie Mae news prompting a subsequent rally in the Japanese Yen. The strong late session rally in the stock indices erased all of the earlier gains. This is just a further indication of how sensitive the USDJPY is to the performance in the stock market. When the stock indices break, traders reduce their holdings of higher yielding assets and buy back Yen.
Technically, the USDJPY is finding resistance with a major retracement area at 105.19. On the downside, the charts indicate the potential for a break back to 102.86. The key is to see how the market reacts at 105.19 if tested.
The same fundamentals are affecting the USDCHF. This market completed a Fib retracement of a major break at 1.055. A break below 1.037 indicates further weakness with the potential for a collapse down to 1.025.
No Changes in Interest Rates Keep Upside Pressure on AUDUSD and NZDUSD
By leaving interest rates unchanged, the Reserve Bank of Australia may be sending a signal that it are still concerned about economic grown and inflation. If the RBA had lowered rates, the signal would have been clear that the series of rate hikes ending in March were working to cool off the economy. Instead, leaving rates unchanged gives the RBA more time to assess the new economic indicators.
Stronger commodity prices helped support the AUDUSD the past two days. A new higher bottom at .9273 is also a bullish factor. The strong close has the market in a position to at least test the 24-year high at .9544.
Although technically still in a downtrend, the NZDUSD is beginning to show signs of life as it has retraced beyond its first upside target zone. The main trend remains down until .8033 is taken out so the market may be vulnerable to one more break down to solidify established support at .7725. Treat .7916 like a pivot area.
Fundamentally, strong commodity prices are providing the best support. The Reserve Bank of New Zealand will also be watching closely the next string of economic reports for any sign the economy is heating up once again because of higher crude oil and food prices.
Please do not hesitate to contact us at 800-971-2440, with any questions.
Slowing European Economy Weighs on Euro Jul 24, 2008 6:19PM- Dollar Rallies Jul 24, 2008 3:32PM
- Daily currency analysis - Jul 24 Jul 24, 2008 12:00PM
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