[T.S.R:16740] Currency Cracks Underscore Unease In Commodity Markets

Euro/USD-The euro came under heavy selling pressure heading into the U.S. trading day, shedding almost 130 pips after hitting an intraday high of 1.3523. The employment and housing data out of the US today, were much better than expected which did put some pressure on the common currency. For the most part though, the move down by the euro probably only factored some of this data, and was more likely sparked by profit taking as the euro approached yesterday's high and traders began to question if the euro could make a clean break higher. With so many discussions continuing regarding the debt situation in Europe, the market still seems hesitant to push the euro too high. At the same time, the fear is not so great as to give the euro bears any type of real edge. Instead, traders just appear to be waiting.

 

GBP/USD – After spending a couple of days fighting to hold onto the 1.6000 level, the pound finally gave way this morning, falling more than 170 pips before finding some support. Earlier today, the Confederation of British Industry reported a reading of -16 on Industrial Order Expectations which was a huge miss from the -1 reading that was expected. The pound held steady for a short time after that release, but as we moved into the U.S. trading day, positive news on the US economic front combined with profit taking to create a great deal of dollar strength. Heading into midday in the U.S., the pound has made a bit of a recovery, climbing back toward the 1.5900 level, but has started to falter once again. From a technical perspective, traders may want to watch the area around 1.5836 which was a double bottom low early in the week and gave the British currency support today. If that level breaks though, it could indicate more losses in store for the pound.

 

AUD/USD – The slide that started yesterday for the aussie, was duplicated again today with the AUD falling below 0.9840 against the greenback. Part of the driver behind this drop was, once again, strong growth and inflationary data posted out of China overnight. This has led to well reasoned speculation that in order to keep their economy from overheating, the Chinese Central Bank will have to take stronger action to slow growth. Any slack in demand, perceived or real, from consumption giant China has a dramatic impact on commodities prices, and thus the closely correlated AUD. As of this writing the AUD/USD is trading as just 50 pips over the 2011 low.

 

USD/JPY – The dollar has rallied over 115 pips from yesterday's low of 81.85 against the yen. Most of this rapid climb can be attributed directly to the economic reports out of the US this morning. Initial Unemployment Claims in the US came in at 404K for the week, about 18K better than expected. It was on this announcement that the rally began in earnest. After a brief pause, the dollar was propelled upward again by the US Existing Homes Sales report which blew past expectations by 400K, registering a total of 5.28M units on an annualized basis. This helped traders confirm the notion that the 6-month trend off the home sales bottom was still firmly intact. In just the last 24 hours, the USD has been able to regain about 70% of the losses taken to the yen in the move down from January 7 to yesterday's low.
 

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

 

Nothing in this article is, or should be construed as, investment advice.

 

 

 

 

 

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