currency
Broad weakness for the dollar as investors move to higher yeilding assets
The dollar tumbled to a three-year low against a basket of
currencies, with market players selling the greenback to buy buoyant risky
assets in a move that threatens to drive the dollar index towards its all-time
low. The dollar has taken a hit in the past few days as investors have
flocked back to higher-yielding currencies, commodities and equities after a
brief shake-out earlier in the week. The chart outlook for the greenback is
looking dire after it tumbled through the 74.17 trough touched in November 2009,
a move that may spark a run towards the 70.698 all-time low hit in 2008.
Investors have rushed into risky assets due to strong U.S. corporate
earnings and signs the global economy is chugging along even as the Federal
Reserve stays very cautious about when it will start to unwind its super-loose
policy. Traders said the move was being fueled in relatively illiquid
trade and there was a risk of a dollar rebound later in the day as market
players cover short positions before long Easter weekends in many parts of the
world. But the overall outlook was dim for the dollar as the Fed is still buying
bonds and the threat by ratings agency S&P to cut the United States’ prized
AAA rating reminded investors of the hurdles the world’s reserve currency
faces.
The euro has pushed to 15-month peaks but has lagged the broader move
due to the ongoing worries about the euro zone crisis, underscored this week by
reports that Greece may restructure its debt in coming months. A solid
auction of Spanish debt the previous day helped provide some reassurance that
the problems plaguing Greece, Ireland and Portugal would not spread to the
country seen as the next most vulnerable in the euro zone. The euro was up 0.4%
at $1.4570 after jumping to a 15-month peak of $1.4582 when an option barrier at
$1.4550, which had blocked its advance last week, was finally taken out. The
single currency also appears to be poised for further gains on the charts. A
break of the January 2010 high at $1.4583 would open the way for a run at the
2009 peak at $1.5145.
The dollar dipped 0.4% against the yen to 82.22 yen , falling back
towards the 82.00 level that is seen as a key level of chart support because it
marks the intraday high reached on March 18 when the G7 intervened to sell the
yen. The yen has also slid broadly with the dollar as the Bank of Japan
has loosened policy since the massive earthquake, tsunami and nuclear crisis,
making the low-yielding yen an attractive funding currency for carry trades
along with the dollar.
The Australian dollar climbed to a record after a government report
showed producer prices rose more than economists estimated in the first quarter,
providing additional evidence that growth is quickening. The Aussie
strengthened for a third day and New Zealand’s advanced for a second versus the
U.S. currency as stock gains boosted demand for the nations’ higher-yielding
assets. New Zealand’s dollar reached a three-year high versus the greenback as
traders added to bets the central bank will raise interest rates over the next
12 months. Australia’s dollar climbed to $1.0766 from $1.0714 yesterday, after
reaching $1.0772, the strongest since it was freely floated in 1983. The Aussie
was at 88.33 yen from 88.45 yen. New Zealand’s dollar rose 0.7% to 80.34 U.S.
cents after appreciating to 80.38 cents, the highest level since March 2008. The
currency was at 65.91 yen from 65.87 yen.
Trading activity may start to slow before the Easter
holidays. Trading desks in London and Hong Kong will be shut both
Friday and Monday, while Sydney markets will be closed until next Wednesday.
Day Trading Course, Yen, Dollar, and Swiss Franc strengthen as investors seek safer assets
The yen, dollar and Swiss franc rose against most of their major
peers amid renewed demand for refuge assets after earthquakes shook buildings in
Tokyo, a month after a record temblor triggered a nuclear crisis. The
yen strengthened against all of its 16 most-traded counterparts after Japan
raised the severity rating of the accident at the Fukushima Dai-Ichi power plant
to 7, matching the 1986 Chernobyl disaster rating. The yen appreciated 1.1% to
120.81 per euro from 122.12 yesterday, set for the biggest daily gain since
March 16. Japan’s currency increased to 83.88 per dollar from 84.60, after
reaching 83.47, the most since April 1. The franc rose to 1.3034 per euro from
1.3087 yesterday. It strengthened to 90.49 centimes per dollar from 90.67, after
touching 90.20, the highest level since March 23.
The greenback gained for a second day versus the euro as the Nikkei
225 (NKY) Stock Average slid 1.7%, pacing a 1.4% drop in the MSCI Asia Pacific
Index. The Standard & Poor’s 500 Index declined for a third day
yesterday. The dollar climbed to $1.44 per euro from $1.4436.
Australia’s dollar fell the most in four weeks against the yen as
Asian stocks extended a worldwide retreat, damping demand for higher-yielding
assets. The Aussie also weakened after a gauge of commodity prices
declined and a technical indicator showed the currency was poised to drop. The
14-day relative strength index for the Aussie against the dollar was at 66
yesterday, near the 70 level that some traders see as a sign an asset’s price
has risen too fast and may reverse course. Against the yen, the RSI was 69
yesterday. Australia’s currency fell 1.4% to 87.55 yen from 88.79 yesterday, the
largest daily loss since March 16, and declined 0.6% to $1.0429.
Gold retreated as a rally to a record prompted some investors to sell
and a tumble in energy prices, sparked by reduced economic growth forecasts from
the International Monetary Fund, reduced inflationary pressures.
Immediate-delivery bullion fell 0.6% to $1,454.68 an ounce this morning after
touching an all-time high of $1,478.18 yesterday. Spot silver shed as much as 1%
to $39.8375 an ounce after reaching $41.9525 yesterday, the highest level since
1980
Day Trading Course, S&P 500 Daily Price Action
Yesterday continued the push to the downside, on volume of about 2.1M contracts price traded to a low of 1305.25 yesterday. Overnight show the work of a retracement going into the open. Today’s trading could see the continuation of the retracement into the 1320′s if volume falls off. If the sellers decide to step back in and move things some more area’s to watch include 1313.75, 1311.50, 1308.50 and 1300.00 support.
