Currency Pair Overview Dollar Continues To Stand Firm
Overall Mixed economic releases from the U.S. were unable to instigate major selling of the dollar as, once again, traders sought the safety of the greenback as risk aversion continued. The dollar has been able to withstand the fundamental pressure created by the Federal Reserve to dilute the currency, so far. Cable and the commodity currencies, the Australian and Canadian dollars, strengthend against the dollar today while the euro, swissy and yen weakened against the greenback. U.S. equity markets rallied during the afternoon session closing in positive territory and a follow through into Asian equity markets tonight is possible.
The Euro (EUR/USD) The euro weakened on Wednesday as mixed economic releases and lower equity markets, through most of the day, forced traders to seek the safety of the dollar as risk aversion dominated the market. The pair dropped 50 pips overnight, helped by German wholesale prices coming in below expectations this morning. On the day, the pair lost 45 pips, strengthening after running into the 100 day simple moving average.
The Pound (GBP/USD) better than expected economic reports concerning the U.K. housing industry last night and this morning propelled the pound to make strong gains against the dollar and euro on Wednesday. Cable breached the 1.5000 level several times during the course of today’s trading but lacked the needed strength to close above that resistance level. Still, the pair continued its impressive run for the week, gaining approximately 350 pips since Sunday’s open. On the day, the pair gained almost 100 pips closing near the 1.4990 level.
The Aussie (AUD/USD) The aussie traded in sporadic fashion on Wednesday, influenced by U.S. economic reports, equity markets and commodities. Mixed U.S. economic reports this morning along with negative equity markets forced traders to seek the safety of the dollar pushing the pair lower. However, equity markets staged an afternoon rally, closing higher, helping the pair reverse direction and posting a gain for the day. The pair gained 60 pips and closed just below the 0.7300 level.
The Cad (USD/CAD) Optimism that the current global economic slump may be nearing an end continues to strengthen the Canadian dollar as a rebound will likely benefit the commodity currencies. The Canadian dollar strengthened for a third consecutive day on Wednesday helped by equity markets in the U.S. closing in positive territory and oil prices closing the day with a small gain. On the day, the pair dropped 115 pips and closed below the 1.2050 level.
The Swissy (USD/CHF) The swissy moved higher during last night’s Asian and after struggling to break above Tuesday’s high found additional momentum and tested the 1.1500 level. The pair struggled throughout the remainder of the trading day but managed to hold on to some of the earlier gains, closing higher by 45 pips but below the 1.1450 level. The 20 and 100 day simple moving averages continue to restrict the pair and both were tested today but managed to hold. Switzerland will release monthly PPI numbers in the morning.
The Yen (Usd/Yen) The yen dropped during last night’s Asian session, falling approximately 80 pips, but strengthened during the European and U.S. session gaining momentum after U.S. industrial production numbers came in below expectations and moved traders to the safety of the dollar. U.S. equity markets staged an afternoon rally and closed in positive territory weakening the Japanese currency even more. At the close of the day, the pair had gained approximately 40 pips, closing near the 99.40 level.