Daily Foreign Exchange Market Summary 14/10/2009

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The US dollar fell to a 14-month low against a basket of currencies and the euro, as solid JPMorgan Chase results, rising equities and commodities fueled optimism about an improving global economy. JPMorgan Chase & Co reported a sharp rise in third-quarter results as underwriting revenue at its investment bank offset deeper losses on credit cards and other consumer loans.  These upbeat results followed forecast-beating earnings from Intel Corp late on Tuesday and positive Chinese trade data, all of which helped brighten the economic outlook and encouraged investors to move into perceived riskier and higher-yielding currencies. The greenback also remains under broad selling pressure on expectations that US interest rates will stay at very low levels for some time.

The euro climbed to a 14-month high versus the US dollar on the view that US interest rates will stay low, while optimism about a global recovery tarnished the greenback's safe-haven appeal. The single currency also received a boost after data showed a monthly acceleration in euro zone industrial output suggesting the region's economy is picking up. 

Sterling hit session highs against the US dollar and euro after UK employment data prompted traders to pare back their heavy bets against the pound that had driven it to multi-month lows the previous day. Official statistics showed the unemployment rate held steady at 7.9 percent in August. Economists had expected a rise to 8 percent. The number of Britons claiming jobless benefit rose by 20,800 in September, less than expected and the smallest rise since May 2008.

 

The Japanese yen steadied against the US dollar as it drew support from a deputy finance minister who signaled yen-weakening intervention was undesirable.  Minezaki said the yen's rise was due to dollar weakness and that weakness was likely to persist.

The Canadian dollar rose to its highest level in over 14 months as upbeat US corporate results sparked renewed optimism for a global recovery and fueled appetite for riskier assets.  The currency's rise was compounded by a lower US dollar as earnings from JPMorgan Chase & Co and from Intel Corp both topped expectations and diminished the greenback's safe have appeal.

The Australian dollar extended its rally to fresh 14-month highs as a broad sell-off in the US dollar gathered momentum, while investors sought higher-yielding currencies. The Aussie also found support from robust consumer sentiment data, which continues to support speculation of another interest rate hike this year.  The New Zealand dollar advanced over half a cent, propped up by weakness in the US dollar and by data painting a brighter picture of the local economy. Also helping to push the kiwi higher are figures pointing to a continued recovery in the housing market and the central bank's withdrawal of emergency liquidity measures, bolstering expectations of rate rises early next year.

Indicative rates:

EUR/USD

1.4920

USD/JPY

89.05

GBP/USD

1.5987

USD/CAD

1.0253

USD/MXN

13.0805

USD/CHF

1.0166

AUD/USD

0.9157

NZD/USD

0.7413

USD/DKK

4.9895

USD/SEK

6.9209

USD/NOK

5.5705

USD/TWD

32.220

USD/CNY

6.8249

10-Year Treasury Note Yield:  3.380%

Dow Jones Industrial Average:  9,975.81 +104.60

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