Alan’s Forex Blog

Forex Mid-Day Technical Report Yen Surges on Risk Aversion and Yuan, Dollar Benefited The Japanese yen surges across the board today pushing through 111.59 against the greenback. While risk aversion on further credit market problems is an ever present theme, there are further support to the yen from speculations that China will allows it’s currency, Yuan, to appreciate faster as PBoC said it will “strengthen the coordinated use of interest rates and exchange rate to help stabilize expectations

Forex Daily Technical Report Dollar Weakens Further against European Majors after Bernanke Dollar resumes decline against European majors on increased speculation for further rate cut from Fed in Dec. EUR/USD made new record high of 1.4737, GBP/USD surges to new 26 years high of 2.1144. USD/CHF also dips to 1.1208, lowest since 1.1100 in 95. Chance of a rate cut in Dec, as implied by interest rate futures, jumped sharply from 70% to 90% after Bernanke’s Testimony before Joint Economic

Forex Mid-Day Technical Report Markets Steady after ECB and BoE, Bernanke Next Euro remains steady in tight range below after ECB left rates unchanged at 4.00% as widely expected. During the following press conference, Trichet acknowledged that recent data confirms upward pressures in inflation and reiterates that ECB stands ready to act in a firm and timely manner to ensure price risks do not materialize. ECB sees inflation rise above 2% in coming months and will start to moderate again next

Forex Daily Technical Report Euro and Sterling Consolidates ahead of ECB and BoE Markets stabilize from yesterday’s selloff in dollar and remain in tight range, waiting for ECB and BoE rate decisions today. ECB is widely expected to keep rates unchanged at 4.00%. Note that Eurozone CPI accelerated to 2.6% yoy in Oct, which is significantly above the bank’s inflation target of 2%. Also, M3 money supply growth, though slowed slightly is still at double digit level, which is much stronger than

Forex Mid-Day Technical Report Dollar’s Free Fall Continues, EUR/USD Hits 1.47, GBP/USD Hits 2.1 Dollar’s free fall continues today as talk of China’s reserve diversification dominates the market. Cheng Siwei, vice chairman of China’s National People’s Congress, said that China will “readjust” the $1.43 trillion of foreign-exchange reserves, favoring “stronger currencies over weaker ones”. This suggest that China may diversify further away from the dollar. Also, not that the largest holder of

Forex Daily Technical Report Dollar Sharply Lower on China Reserve Diversification Talk Dollar has been extremely weak recently on fear that credit market problems will worsen and force Fed to continue easing. The fall in greenback accelerates today after comments from Cheng Siwei, vice chairman of China’s National People’s Congress, said that China will “readjust” the $1.43 trillion of foreign-exchange reserves, favoring “stronger currencies over weaker ones”, suggesting that China may

Forex Mid-Day Technical Report Dollar Made Record Low again, Swissy Rises on Safe Haven Flow Dollar weakness resumes again on worry that subprime mortgage and credit market problems will deteriorate further that would trigger another rate cut from Fed in Dec. EUR/USD surged to another record high of 1.4554. Additional strength is seen in the Swissy Franc, after BoE King said that time is needed for banks to reveal subprime losses and it will take several months for banks to return to normal.

Forex Daily Technical Report Dollar Mildly Weaker But Still in Range Dollar edges lower against European majors but after all it’s still bounded in established range. Fed’s Mishkin said overnight that the Fed’s decision to cut rates was based on the the view that ‘potential costs of inaction outweighed the benefits’. However, he mentioned that Fed is ready to reverse course if it’s proved that Fed’s easing has gone to far and fuels inflation in the coming months. This raised some thoughts that