Currency Pair Overview Dollar weakens On Lighter Volume
Overall Despite volume being very low because of the European and Canadian markets being closed, the dollar retreated on Monday after the Federal Reserve took action in the Treasury market in an effort to increase liquidity in the lending market. The dollar started Sunday’s Asian session mixed, but strengthened slightly during the opening 3-4 hours of the new week. However, as the session progressed, the greenback weakened and the momentum continued through the European and U.S. trading sessions.
The Euro (Eur/Usd) After falling approximately 60 pips during the early part of last night’s Asian session, the pair rebounded and moved higher throughout the European and U.S. trading hours. Traders remain cautious with the single currency as it is still unclear whether the European central Bank (ECB) will lower interest rates below the 1% mark. On the day, the pair gained almost 200 pips closing above the 1.3350 level and testing the 20 day simple moving average.
The Pound (Gbp/Usd) dropped during the early part of the Asian session before reversing and moving higher as we headed into the London open. The upward momentum continued throughout the day as the pair gained 230 pips on lighter volume. The economic calendar is very light this week for the pound and there is nothing scheduled until Tuesday evening’s RICS house price balance is released.
The Aussie (Aud/Usd) The aussie strengthened from the outset of last night’s Asian session and after running into resistance at the 0.7220 level, consolidated, gained momentum and moved higher throughout the remainder of the trading day. The pair gained approximately 75 pips on the day and was testing the 0.7300 level at the close.
The Cad (Usd/Cad) The cad struggled to find direction during the overnight sessions but experience some volatility after the U.S. session got under way. Credit conditions in Canada as well as sales prospects remain grim. 52% of sales executives said they expect sales growth will decline over the next 12 months. Overall, the Canadian dollar strengthened against its U.S. counterpart as the dollar weakened in the broad market. On the day, the pair lost 70 pips and closed below the 1.2200 level.
The Swissy (Usd/Chf) The swissy moved much lower during Monday’s trade after initially moving higher at the start of the Asian session. The Federal Reserve bid Treasury prices higher in an effort to reduce yields and increase liquidity and the moves brought high volatility. The swissy broke below the 50, 100, and 200 day simple moving averages intra-day and is challenging the 200 day SMA as support at the close.
The Yen (Usd/Yen) The yen traded in a tight range on Monday, closing the day lower but unable to hold below the 100.00 level. U.S. equity markets closed lower and the dollar was sold across the board which strengthened the Japanese currency. The lower moves could very well have been stronger but speculation that the global recession is nearing a bottom is encouraging traders to sell the Japanese yen and purchase higher yielding assets. The Japanese currency fell against all of the other major currencies.