Impact of the US National Capital Long Term Purchases report on the Greenback

Forex News:

The US National Capital Long Term Purchases report was published yesterday. This indicator represents the difference between foreign investments in the US and US investments abroad and demonstrates foreign confidence in the US economy. Figures showed that Net foreign purchases of long-term securities slowed markedly in January according to the Treasury Department. Total holdings of equities, notes and bonds increased a net $19.1 billion in January. This is down from $63.3 billion in the previous month. The figure had leaped to $126 billion two months ago, but was then cut to half.

The Dollar in the forex online market closed down significantly against the GBP in the wake of this news. It started the day trading at 1.5774 against the Pound but slid to 1.5044 at the close of the day. It also dropped against the Euro, although not as significantly, opening trading at 1.3762 before going on to close at 1.3758.

Elsewhere in the US manufacturing in the New York region expanded in March for an eighth straight month, indicating factories are sustaining production and lifting the U.S. economy. The index plunged in December but has since recovered. The report showed orders, sales and employment increased in March, a sign that manufacturing gains may last for months and help spur the rest of the economy. The Empire State index is of interest to investors and economists primarily because it is seen as an early indicator of what the Institute for Supply Management’s March national factory survey due out in two weeks may show. In February, the ISM manufacturing index inched lower to 56.5 but continued to point to solid growth in the factory sector.

Industrial production unexpectedly rose in February, due in part to gains in demand for computers and semiconductors that signal the pickup in U.S. business investment is being sustained. Production climbed 0.1%, the eighth consecutive increase, as utility use and mining increased according to figures from the Federal Reserve. Capacity utilization or the proportion of plants in use, climbed to 72.7% from 72.5%. The gauge averaged 80% over the past two decades and suggests inflation will remain low. The amount of spare capacity is among reasons analysts anticipate Fed policy makers will reiterate a pledge to keep interest rates low. The US Federal Reserve is expected to hold interest rates near zero when they are announced later today.

Before the Fed Rate is announced the Building Permits and Housing Starts figures for the month of February are due to be announced. The housing sector had a big contribution to the downturn in the global economy and is now showing signs of a slight recovery. Building permits dropped to 620K in January, they are expected to be down to 619K; housing starts are expected to drop from 590K to 570K.

From http://forextradingguru.blogspot.com

Britain’s Trade deficit widens

Forex News:

Britain’s goods trade deficit with the rest of the world unexpectedly swelled in January to reach its widest level since August 2008, fueling concerns about the strength of the country’s broader economic recovery. Yesterday, the Office for National Statistics reported that Britain’s trade deficit widened to 7.987 billion pounds from 7.010 billion in December, well above market expectations of 7 billion, as lower sales of chemicals and other commodities prompted a steep slump in exports. This disappointing figure will most likely fuel policy maker’s concerns that the sharp depreciation in the value of the Pound has not led to the expected increase in exports. Bank of England policy maker Kate Barker said yesterday that Britain’s economy has shown a “disappointing” response to the weakness of the pound, which has fallen about a quarter in the past three years on a trade-weighted basis. Government Officials want gross domestic product to refocus on exporting as they try to entrench Britain’s recovery. The deterioration in the global trade balance was the direct result of a 6.9% fall in exports, the biggest decrease since July 2006; while there was speculation that the Britain’s unseasonably harsh winter could have hampered the movement of goods, according to officials there was no firm evidence to support this theory. Imports fell just 1.6%.

Following the release of this disappointing news, the GBP slipped as much as 0.2% against the U.S Dollar and was trading down 0.9% on the day at $1.4957. After closing at $1.49991 yesterday, the Sterling plunged another 0.54% this morning to touch on $1.49176 in the forex online market.

Later this morning (930GMT), the Office for National Statistics will announce the U.K’s manufacturing production for January. After increasing 0.9% between November and December of last year, the growth in manufacturing production is expected to slow, with the market expecting a rise of 0.3% between December and January.

Also later today (1900GMT), the U.S Treasury Department will release the Federal Budget Balance. While it is no secret that the U.S government is in serious debt, last month the size of the budget fell to a more acceptable level of -42.6B. This month, the market predicts that the deficit will to surge back up to 207.5B, weighing heavily on the value of the U.S dollar.

Tomorrow, both the US and Canada will simultaneously release their Trade Balance. This double-feature release always triggers action in USD/CAD. The American deficit is expected to remain high at around 40 billion, while Canada is expected to turn from a deficit of 0.2 to a surplus of 0.4 billion.

Later this afternoon (1800GMT), the European Central Bank president Jean-Claude Trichet will speak. As head of the ECB, which controls short term interest rates, Trichet has more influence over the Euro’s value than any other person, and so his words will be carefully listened to. Today’s speech, held at the the inauguration ceremony of the Language of Money in Frankfurt, will be followed by a second, held at Institute of Economic Policy Research in Stanford, this Friday.

From http://forextradingguru.blogspot.com

In Anticipation of BOE and ECB’s rate decission

Forex News:

Early this morning, Germany released its monthly retail sales report. Despite a predicted drop of 0.5%, retail sales were unexpectedly stable for January, while December gains were revised upwards modestly- fueling hopes that consumer supported recovery may emerge within the coming months. This will be followed by the publication of the entire Euro Zone’s monthly retail sales for January, predicted to show a decrease of 0.3% from the previous month. With no other important news coming out for the rest of the day, investors will turn their attention to tomorrow’s impeding ECB rate announcement. Once again, Jean-Claude Trichet, president of the ECB, is expected to maintain the minimum bid rate at its current record low level of 1.0%.

The ECB’s rate decision will be preceded the Bank of England’s announcement of its overnight rate. The BoE is expected to keep its key lending rate at its current record low level, despite signs that Britain is emerging from the recession at a faster pace than previously anticipated. While the country’s GDP may have grown 0.3% (revised) for the fourth quarter of last year, analysts predict that it is highly unlikely that the central bank will opt to exit its “easy” monetary policy so quickly.

Yesterday, the Sterling plunged to a new 10 month low against the greenback in the forex online market as speculation continued to increase that neither the Labor nor the Conservative party would win an outright majority in Parliament in the coming June election- obstructing efforts to cut the country’s historically high budget deficit. After slipping 1.045% on Monday (at one point diving a record 3% to a $1.4784, its lowest level since April 2009), the GBP continued to fall against its American counterpart yesterday – deprecating an additional 0.2314%, to close at $1.49607.

Despite increasing chances of a “hung” parliament in addition to a plummeting currency, U.K consumer confidence jumped in February to a two-year high. The index of consumer sentiment increased 6 points from the previous month, to a new level of 80.

Yesterday, the U.K released its construction PMI, showing a fall from its previous level of 48.6 to 48.5 (a number greater than 50.0 indicates expansion, while number below shows contraction). Early this morning (930GMT), the U.K will release its Service PMI- while this report is the last PMI for the week, it is the most important. The service sector, which includes the financial sector, was improving up until last month. After falling to 54.5, analysts predict a slight increase of 0.5 points this month, to a new level of 55.0.

The U.S dollar weakened across the board, falling against 15 of its 16 major currency counterparts, following the release of the Bank of Dallas Fed Chairman’s statement that borrowing costs should continue to remain low until the economy picks up- which according to him “won’t happen for some time”.

Later today (1315GMT), the U.S will release its ADP Non-Farm Employment Change. While generally considered a predictive index for Friday’s highly anticipated Change in Non-Farm Payrolls, the ADP is expected to show a drop of 15K. With Payrolls have declined in 24 out of the past 25 months and economists are predicting another decline of 40,000 in February.

From http://forextradingguru.blogspot.com

Greenback sliding against the EUR and the Yen

Forex News:

In reaction to the news that the FOMC would be keeping its benchmark interest rates exceptionally low for some time, the greenback slide against both the Euro and the Yen.

In addition, despite signs that the U.S housing market was beginning to recover, sales of New Homes fell to its lowest level on record- further fueling the dollar’s decline against its major currency counterparts.

Purchases of new homes within the U.S tumbled below expectations to an annual pace of 309,000, signaling that the added extension of the government tax credit may not be enough to revive demand.

This report further highlights Fed. Chairman Bernanke’s prior comments that even though the economic situation of the U.S is making a promising recovery, homebuilders continue to face intense competition from foreclosed properties that are continually driving down the prices in the market, while at the same time robbing the demand for new homes.

The result of which causes a chain reaction –decrease sales of new homes leads to a decrease in demand for construction, thus a decreased amount of employees in that field – directly effecting the level of employment for the country.

Following the release of Bernanke’s testimony to the House Financial Services Committee, and pessimistic U.S. Home Sales data – the U.S dollar plunged against its major counterparts. The EUR/USD broke a session high at 1.36250, and closed at 1.35371, up 0.18% from the day’s opening price at the Forex online market.

Today is the second half of Bernanke’s testimony of Congress; in addition, the U.S will release the Unemployment claims for last week, expected to drop to 461K, from the previous week’s 473K joblessness claims. Also out today (1330GMT), the monthly Core Durable Goods Order.

Orders have been revised to the upside in the past month, from 0.3% to 1%; while, Core orders have been revised to 1.4%. The positive trend is expected to continue, with a rise a rise of 1.6% in orders and 1.2% in core orders. This figure doesn’t touch the consumers, but has a long term impact on the economy.

From http://forextradingguru.blogspot.com

Recession Continues to steal jobs across the British Island

Forex News:

U.K jobless claims unexpectedly jumped this past January to the highest level since April 1997, as the recession continues to steal jobs from businesses across the British Island.

Yesterday morning’s Claimant Count Change reported that the number of people receiving unemployment benefits rose to a record 1.64 Million, increasing by a drastic 23,500 claims from the previous month.

Last month the number of joblessness claims had dropped by 14.6K – this month, economists were expecting unemployment claims to continue to fall by another 9.6K. Despite this increase, the unemployment rate stayed as expected at 7.8%.

In regards to salary, the average earnings index rose a dismal 0.8% last December over the year (1.2% excluding bonuses), versus expected 1.2% – the lowest recorded yearly change in salaries.

Despite the disappointing job figures, The GBP saw little change in the Forex online market trading, after the release of the worse than expected claimant count, trading at $1.5770 down 0.115% from the day’s opening of $1.57882.

Moreover, the Bank of England meeting minutes were released and showed that BoE policy makers agreed unanimously pause their £200 billion bond purchasing program.

Tuesday’s bullish trend for the GBP/USD took a turn for the worse, as the combination of the BoE vote to suspend its asset purchase program along, push the sterling down 0.744% against the greenback – the pair closed at $1.56647.

Early this morning, Britain’s bureau of National Statistics will release the Public Net Borrowing Figure – the difference in spending and income from public operations, central government and local governments.

British public expenditure is eyed by the opposition and by investors alike. After many months of extended borrowing, the British government is expected to report negative borrowing of 2.4B,something that could potential help the Pound regain some of yesterday’s losses.

From http://forextradingguru.blogspot.com

Trade balance curved in the market Unbalance

Forex News:

Early yesterday afternoon, the US and Canada simultaneously released their Trade Balance. The U.S December Trade Balance came out wider than expected – the deficit rose to -40.2B as imports surged more than exports.

Forex Analysts had predicted that the deficit would contract to 35.8B from its previous reported level of 36.4B, instead the US trade gap unexpectedly widened to its biggest level this year.

Even though exports climbed to their highest level since October ’08, this eighth consecutive rise in exports was trumped by an 8.4% increase in Imports (particularly petroleum).

The result of faster economic growth in emerging countries combined with a drop in the dollar’s value is allowing American goods are becoming more competitive and may in fact propel gains in sales overseas that will spur further gains in U.S. manufacturing.

On the other side of the 49th parallel, Canada also saw their Trade Deficit widen more than expected. As imports slightly outpaced exports, Canada’s trade deficit remained at 0.2B, versus the expected forecast that the trade deficit would shrink to 0.1B. The 1.7% increase in exports was slightly outpaced by a 1.8% rise in imports resulting in Canada’s trade deficit with the world widening to $246 million in December from $201 million in November.

According to the Bank of Canada, the combination of low U.S demand and strong Canadian dollar are a “significant drag” on the economy. Governor Mark Carney has pledged to keep his benchmark lending rate at a record 0.25 percent through June to stimulate demand unless the inflation outlook shifts.

Following the release of both countries trade balances, the Canadian currency tumbled against the USD- the pair increased from the day’s open of 1.06651 USD/CAD to 1.0686; however, by yesterday’s close, the Loonie managed to regain some of its lost ground against its US counterpart- closing at 1.06265.

Across the Atlantic, the Euro continues to move away from its 8 month low against the USD, as speculations increase that today’s EU summit will shed light on a possible rescue package for Greece. With the EU holding their 1 day summit today, the EUR increased from yesterday’s close of 1.37336USD to a high of 1.37995 in Asian markets early this morning.

While the Euro continues to rise versus its American counterpart, the British Pound continues to plummet against the USD. Yesterday, the Sterling was hit hard as the BoE Inflation report forecasted low inflation for a long period, suggesting more quantitative easing ahead; the Pound plunged 0.88% from its opening price of 1.57088 to 1.55701, finishing off the day at 1.55974.

Yesterday, the Bank of England lowered U.K.’s economic outlook and forecast inflation to undershoot its 2% target. The central bank Governor Mervyn King also kept the door open for further quantitative easing.

Britain’s February Inflation Report depicts economic growth to reach around 3.2% in the second quarter of next year- smaller than the previous estimate of 4%. According the BoE, the strength of the recovery is highly uncertain and output is unlikely to return to a level consistent with its pre-crisis trend for a considerable period.

King forecasted inflation to exceed 3% in January, but estimates the figure to fall below the target quickly. Annual inflation had exceeded the central bank’s 2% target in December for the first time since May 2009 and stood at a nine-month high of 2.9%. “It is more likely than not that inflation will be below the target for much of the forecast period, but the risks are broadly balanced by the end,” the bank said.

Shortly midnight, Australia released its employment change for January as well as its current unemployment rate. With both numbers coming out better than expected – employment change increased to 52.7K versus expected 15.1K causing the unemployment rate to tumble to 5.3% versus expected 5.6% and prior 5.5% – the Aussie rose more than 1% against the dollar and the Yen.

The AUD/USD opened in Asian Markets this morning at 0.87506- after the release of the better than expected employment data, the pair increased 1.75% to a week high of 0.89040

From http://forextradingguru.blogspot.com

Both Britain and Europe to announce rate decision, one day ahead of U.S Non-Farm Payrolls

Forex News:

It is a very busy day ahead, as both the European Central Bank and the Bank of England are scheduled to announce their rate decisions.

Early this afternoon (1245GMT), the European Central Bank will announce its Minimum Bid Rate. The ECB, is expected to keep benchmark interest rates at its current record low level of 1.0%. This prediction come after Jean-Claude Trichet, president of the ECB, indicated that he would like wait for new growth and inflation forecasts in March before deciding when to step up the withdrawal of measures used to battle the financial crisis. Continual concerns over rising unemployment, in addition to increasing apprehensions that Greece’s fiscal problems could spread through the Euro zone, complicate the ECB’s efforts to return the euro-area economy to health.

The ECB announcement comes shortly after the Bank of England’s official rate decision (1200GMT). Analysts do not predict a rate hike- the BoE, is expected to leave the overnight rate at its historical low level of 0.5%. This decision comes out following earlier announcements, and indicators that that the UK emerged, barely, from the recession in the 4th quarter of last year.

The pressure is high for the Euro and the Pound, as these two highly anticipated rate decisions, come one day ahead of the U.S Non-Farm Payroll Change (announce tomorrow at 1330GMT), and follow yesterday’s release of a better than expected ADP Non-Foreign Payroll figure.

The release of ADP Non-Foreign Payroll, widely considered as an indicator for the NFP, fueled the dollar towards appreciating against both the Pound and the Euro. Following the release of the ADP figure yesterday, the EUR/USD, fell below the 1.4 mark, hitting 1.3960. This bearish reversal, further confirms that the Euro is on the cusp of entering a downwards trend against the dollar- any unexpected news in the ECB official bank rate today, could send the Euro spiraling downwards against its USD counterpart.
Moreover, the positive news in regards to U.S employment further caused the Pound to depreciate against the dollar. Yesterday, the GBP/USD tumbled from a 1.6070 session high to close at 1.59003.

For the first time in a long time, analysts are predicting an increase in the US Non-Farm payrolls of 10K. Last month’s Non-Farm Payrolls were disappointing and showed a loss of 85,000 jobs in the US in December. Hopes were already high for the Non-Farm Payrolls, but expectations increased exponentially when yesterday’s ADP Non- Farm Employment Change, was much better than expected. The ADP figure, which measures the jobs in the private sector, showed a loss of 22,000 jobs. While it is still a negative number, it is much lower than the expected loss of 31K, and lasts months loss of 61K.

Apart from increasing against both the GBP and the EUR, the positive results of the ADP figure, triggered the USD/JPY to rebound from 90.05 session low has extended to session high at 90.85 high.

The release of a better than expected positive result in the Non-Farm Payrolls on Friday will certainly further boost the dollar against its major currency counterparts, and raise chances of a future rate hike. While there have been many signs that the U.S is on the road to recovery (namely the higher than expected Q4 GDP, announced last week), a strong number in the NFP, will surely push the USD on the path to regaining some of last year’s traumatic losses.

From http://forextradingguru.blogspot.com

Euro continues to face a tough battle

Forex News:

The U.S dollar slipped further away from its six month high against the Euro, as concerns in the Forex market began to ease over Greece’s debt. The EUR managed to keep a firm hand, on overnight gains, reaching $1.36969 (increasing 0.18% versus the USD) in the Asian Markets early this morning. However, the Euro continues to face a tough battle, as investors continue to remain skeptical over Greece’s, and now Portugal’s, financial problems.

Whether the Euro manages to hold on to this morning’s gain against the US dollar is yet to be seen- as both the EU and US are set to release two pivotal reports later this week (EUR minimum bid rate, USD Non-Farm Payroll Change).

Tomorrow (1245GMT), the European Central Bank will announce its minimum bid rate- Jean Claude-Trichet, the president of the ECB, is predicted to leave the overnight Interest rates unchanged at 1.0%. Unemployment in the European Union has skyrocketed to 10%, while the recovery from the recession is still wavering- the decision to keep the rate low will hopefully give the EU a stronger push towards economic recovery.

Later today (1315GMT), the US will release its ADP Non-Farm Payrolls, a predictor index for Friday’s widely anticipated Change Non-Farm Payroll. The index is predicting a further decrease in the number of employed people by 31K; a substantially smaller decrease than last month’s fall of 84K. Also today, the US will release it ISM Non-manufacturing PMI expected to come in at 51.1, versus a prior level of 49.8 in December. A reading of above 50 signifies growth, indicating that service industries in the U.S are expected have expanded in January.

This morning the Asian market saw an increase in the GBP, as the sterling rose following news that the UK consumer confidence improved in January coming in better than expected and increasing 3 points from the previous month. The Pound advanced against 15 of its 16 major counterparts following news that that consumer sentiments were improving. Following the release of the index, the British currency rose to $1.6027 (6:40 GMT) from $1.5973 in at closing in New York yesterday.

Britain managed to return to economic growth in the Q4 of 2009, as both housing prices and unemployment began to decline. However, this small increase in the Pound could easily be lost. Tomorrow, the Bank of England will announce the Official Bank Rate- the Monetary Policy Committee is expected to leave its key interest rate unchanged at the record low level of 0.5%. Moreover, the BoE is expected to call an end to its radical policy of pumping out new money after Britain narrowly emerged from the recession in the last quarter of 2009. Introduced almost one year ago by the Bank of England, this extreme policy’s objective was to encourage commercial banks to increase lending to both businesses as well as individuals.

Australia’s trade deficit continued to widen last December, as imports of goods such as gasoline and oil reached 2 year high – further adding evidence to the economic recovery. Imports rose 6% last December, the biggest monthly gain since May of 2008 (oil and gasoline imports jumped 26%, while gold imports swelled a record 51%). Following yesterday’s decrease of 1.4% against the USD (due to the unchanged overnight rate), news of the increased trade deficit, caused the Aussie to continue to fall against the greenback- dropping from 88.7 U.S cents to 88.64 U.S cents after the announcement.

The fate of the AUD is still up in the air, as tomorrow (0030GMT) the Australian Bureau of Statistics will release its monthly Building Approval, expected to fall 0.2% versus prior increase of 5.9%, and its Retail Sales, expected to increase slightly by 0.3% versus prior reported increase of 1.4%. The RBA’s decision yesterday to keep the interest rate unchanged at 3.75% sent the Aussie on downwards spiral. If these two reports come in better than expected the Aussie could potential regain some of yesterday’s and today’s losses.

From http://forextradingguru.blogspot.com

The USD makes a surprising recovery

Forex News:

The USD finished off last week on a very positive note as the dollar rose against all major currency, following the release of Friday’s stronger than expected economic indicating that the United States was recovery faster than other developed countries.

When markets closed on Friday, the Dollar reached a 7 month high versus the Euro as the EUR/USD drastically fell allowing the dollar to cross the 1.4 EUR/USD mark- closing at 1.3860. The dollars increasing momentum was also shown as it hit a hit a three week high against the British pound, closing at 1.5983 on Friday. The USD also gained against the CHF and the CAD.

The gains in the US dollar can be attributed to the release of Friday’s advanced GDP. The report showed a rapid increase of 5.7% for Q4 of 2009 – the fastest increase in 6 years. Such positive data raises expectations that the U.S FED would potentially increase interest rate before the European Central Bank, thus encouraging investors to move into dollar based assets.

However, despite this unexpected accelerated growth in the Q4, many economists are concerned that this economic rebound may not be sustainable as fiscal and monetary stimulus is withdrawn and recent data shows the recovery in housing and retail demand slowing.

A closer evaluation of the Q4 GDP, reveals that much of the increase in the GDP was due to increased auto production and rebuilding of inventories; at the same time, consumer spending and investments remain weak.

Much of the improvement in Q4 GDP was due to increased auto production and rebuilding of inventories. Consumer spending and business investments remain weak. USD traded higher after release of stronger than expected GDP. The GDP report may have some analysts looking for an earlier FOMC rate hike. The GDP deflator however came out below expectations which suggest that inflationary pressures remain tame despite improving growth.

While the USD may have ended January on a promising note, it is questionable if it can continue its uphill battle and regain some of the previous year’s losses against it major counterparts. The first week of February already promises us some interesting economic action, starting today with the release of Personal Spending expected to increase 0.3% compared with the 0.5% of last month, and the January ISM Manufacturing PMI expected at 55.5 compared to last month’s 54.9. Tomorrow, the US will release its Pending Home sales – expected to remain at the same rate as the previous month. US Dollar traders will have to pay strict attention to any surprises in the Non Farm payroll results, released later this week on Friday.

This week, the US will also be releasing its unemployment claims, followed by the unemployment rate predicted to stay constant at its dismal level of 10%. Its predicted that the US labor market added a net 13,000 jobs throughout the month of January-however, these numbers are notorious for being volatile and very difficult to predict.

Its sufficed to say that USD is in for a risky week- whether or not the dollar manages to hold on tight to its previous week’s gain, all depends on whether this week’s fairly positive predictions transpire.

From http://forextradingguru.blogspot.com

Obama Address to Union Proved Optimistic for USD

Forex News:

The US session saw the USD generally firmer with the USD index closing above its 200-day MA for the first time since May last year.

Weak US data helped to temper gains however, as US new home sales came in at a disappointing -7.6% m/m which held Wall St in negative territory for the most part.

GBP rode a mild up-wave after BOE’s Sentence sounded more hawkish in his comments while corporate demand linked to UK dividend payments also kept cable pinned close to 1.62. ECB’s Weber was also more positive on exiting stimulus measures, saying the bank could take further steps before H2.

EUR/USD nevertheless had a quick peep below 1.40 early in the Asian session, taking out some stops below, with concerns that Portugal and Spain may be the “next Greece” to hit the headlines.

Central bank rate meetings in New Zealand and the US did not produce any rate changes or significant developments.

The RBNZ kept an unchanged stance from the December meeting, and reiterated that it may be ready to start raising rates from the middle of 2010. With some market participants expecting of a more dovish commentary, it was seen as slightly NZD positive.

The key outcome of the today’s FOMC meeting was the dissenting voice – Hoenig – who voted against the Fed repeating its “extended period” language for describing how long the Fed plans to keep interest rates this low.

On the Fed’s plans to withdraw liquidity, very little was changed, with the Fed merely specifying that March 8 will be the final auction for the Term Auction Facility. The outlook for the US economy seemed to have improved since the last meeting and this was reflected in the tone of the statement. Post-FOMC risk appetite seemed to make a comeback with Wall St rallying into positive territory into the close.

Asia started off in a similar vein though was soon caught up in geo-political developments as Yonhap news reported that North Korea had again fired artillery towards South Korea into the disputed maritime border between the two countries.

Forex markets reacted with further USD buying and stops through 1.3970 in EURUSD were again triggered with a quick run down to 1.3935 amid a flurry of selling reported in EURJPY and EURGBP.

President Obama’s state of the Union speech proved more positive for the USD and for risk appetite overall. He assured that there was no intention to “punish” banks but his major interest is the US economy with the biggest focus employment, and wants to create 1.5 million jobs via economic stimulus this year.

To this end, Obama threw his weight behind extending middle class tax cuts, laid out a series of tax incentives for businesses and urged Congress to finish work on a jobs bill “without delay. Otherwise he proposed taking $30bln of TARP bailout money to help community banks give credit to small business and set the goal of doubling US exports over the next 5yrs, with a push for stronger trade ties with Asia.

Asian bourses responded positively and we saw the corresponding strength in Asian currencies. Majors were also on the rebound with the likes of EUR, GBP and AUD all recouping earlier losses. Having reached there, we held in limbo awaiting the entrance of Europe for the next directional clues.

European data releases are relatively minor with unemployment data from Sweden, Denmark, Norway and Germany on tap while Sweden retail sales and Euro-zone consumer confidence are also due. The US session features Chicago Fed Activity, durable goods and the weekly initial jobless claims.

From http://forextradingguru.blogspot.com

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