Overall, the dollar strengthened across the board in the Asian session, regaining some of the ground lost during the previous day of trading. The greenback’s strength comes before the interest rate decisions from the ECB and the BoE. Both banks are expected to reduce the key interest rate by 50 basis points, in an attempt to help the economy. Interest rate decisions are seen as the most important releases from the currency market, being one of the few things that back the value of a currency.
The Euro (Eur/Usd) managed to gain 100 pips and close in the green for the first time in the last four days of trading. The pair was sold shortly after the opening bell, but then slowly started to move up during the overnight and the U.S. sessions. In tonight’s Asian trading hours, the euro fell 60 pips.
The Pound (Gbp/Usd) moved only up in the last day of trading, gaining 170 pips by end of the U.S. session. In addition, the pair broke briefly above the 4h resistance line, near the 1.4150 area. However, during tonight’s Asian session the yen sold 70 pips, breaking under the 1.4150 area again.
The Aussie (Aud/Usd) strengthened 100 pips yesterday and reversed the strong selling that came in the early trading hours. Despite this, the aussie has failed yet another test at the 20-day moving average, the resistance area that withstands for more than a month, in spite of numerous breakout attempts. In the Asian session, the aussie fell 65 pips, after it bounced from the same resistance area.
Australia has posted a lower than expected trade balance for the month of January. In seasonally adjusted terms, the surplus was A$0.97 billion; this is a decrease from December’s A$0.42 billion which was also revised lower, from A$0.59 billion. The building approvals from Australia fell a seasonally adjusted 3.7 percent, month over month, in January. This was against expectations for the relatively small increase of 1.4 percent. The trend estimate for total dwellings approved has fallen 4.3 percent for the 14th consecutive month in January
The Cad (Usd/Cad) bounced from a very important area yesterday, and fell 220 pips afterwards. With this decline, the cad pared the gains from the previous two days of trading. In the Asian sessions, the cad followed the general market direction and rose 50 pips.
The Swissy (Usd/Chf) declined 90 pips yesterday, and fell back to the same wide range where it has been trading for the last few weeks. During the Asian trading hours, the swissy moved relatively strong, gaining 55 pips, after it tested the 20-day moving average.
The Yen (Usd/Yen) gained 100 pips in the last day of trading, but overall the pair only moved for a short period before the London Open. In the Asian and U.S. sessions, the yen traded trapped in small ranges, unable to break anywhere. Tonight, during the Asian session, the yen rose 25 pips and tested the same range as in the U.S. session.
Capital spending in Japan has fallen by 17.3 percent during the fourth quarter of 2008. This is a steeper drop than the 15.6 percent decrease which was expected by economists. Spending was cut in the last quarter at the fastest pace in the past ten years. This was caused by exports crashing to a halt as manufacturers earnings evaporated. This report is expected to be used to revise the GDP statement.