Today the Australian dollar gained against the greenback, after the RBA decided to leave rates unchanged. The forecasts wanted the bank to continue cutting heavily, however a temporary halt for now was totally unexpected, giving the Aussie dollar a chance to shine against the greenback. Traders took this opportunity to buy the other high-yield currencies, sending the New Zealand dollar to new daily highs. The stocks moved on positive territory after the European open, after the World Bank announced late last night that the global economy has seen the worst for now! These words are yet to be proven, so until we see clear signs of global stabilization, the downside may be the case for now!
The EUR/USD managed to reverse some of its losses early in the European session, however the move found a temporary break at 1.2670 which is a very good resistance level for now. Only a clear break of the latter level will give us further upside towards 1.2730. The dollar seem to be weak against the euro and the pound today, however a re-tracement after many days of dropping is expected. The question is, can the euro manage to break higher? As long as the pair trades above 1.2630 there may be some likelihood of further gains, however, in such an extremely fragile environment, any rally is always met with further selling and in the case of euro, it looks like the dollar bulls are waiting just round the corner to sell the pair down to further lows!
Today the economic calendar has a few important economic releases out of Canada, with the BOC's rate decision which is expected to be another cut of 50bps! After the RBA'S sudden decision to keep rates unchanged, all bets are off now, and it will be interesting to see if they decide to cut even further down to 0.50%. The Canadian dollar is seeing mixed trading and traders have already priced in another cut. The surprise in the markets will come if rates remain unchanged or the cut is less than 50bps. Also, we have pending home sales which is expected to print a dismal number and the main event of the day: Mr. Bernanke's testimony in front of the Senate regarding the economic outlook! Markets are not expecting anything major to be announced by the FED's president, however any bearish tone on the economic outlook may start off another wave of stock sales, therefore providing safe haven in the dollar!
Markets are getting ready for the next day's important data, and traders are wondering what the ECB and BOE will do in their respective rate meetings! The economic situation in Euro-land continues to deteriorate and there is much speculation as to how the situation will effect the already battered euro! Some economists predict the unthinkable - a collapse of the Eurozone and eventually of the euro as a joint currency! This scenario is extreme; however in extreme times we have extreme measures!
Let's see how New York opens and if the DOW JONES retrace from 12-year lows which got printed yesterday! Market participants are weighing all data and the prospect of another bad payroll number is making everyone wary regarding the stocks outlook! The forecasts are really negative for the non-farm payroll, a potential -630.000 job losses, which if that occurs, investors may continue the bearish move which started after the New Year...