The dollar regains it’s winning ways this morning as last week’s encouraging White house intervention regarding Chrysler and GM stimulates markets. We have however seen volumes and activity slowly wind down as the world prepares to celebrate Christmas and the Christian New Year. While this “breather” is very much noticeable for the equities and Currency markets – recent developments in the U.S have allowed the green back to somewhat “bounce back” from the retracement of the past two weeks. The stabilization that the $17.4Bn Auto rescue plan brought to the markets has eliminated a short-term event risk going into 2009 – where more challenges await the global economy. The EURUSD traded a tight 1.3950 – 1.4040 range in early Asian trading before hitting larger volumes at European Open. These more subdued moves come after a week of record price action as the dollar slid against all currency pairs – dropping a massive 16.6% since the 5th of December. The USDJPY reacted most to the announcement of the Auto bailout in the U.S, turning on itself, rising from its 15 year low of 87.15 back to and testing the 90.00 levels this afternoon. Since Friday the Yen has given back to the dollar on renewed risk appetite – up a tentative 1.5%. The Yen’s stellar advance in the past 3 months has seen a decline as the BoJ cut rates near 0% last week and further bad economic news hits the news wires – Trade deficit at record lows -26.7% annualized and further stimulus packages in the works. While we anticipate very thin volumes during the Christmas break the Dollar seems to be set to remain strong as renewed risk appetite and repatriation continues. While we haven’t mentioned it as of late, the “cash is king” maxim is still very much alive.
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The dollar regains it’s winning ways this morning as last week’s encouraging White house intervention regarding Chrysler and GM stimulates markets. We have however seen volumes and activity slowly wind down as the world prepares to celebrate Christmas and the Christian New Year. While this “breather” is very much noticeable for the equities and Currency markets – recent developments in the U.S have allowed the green back to somewhat “bounce back” from the retracement of the past two weeks. The stabilization that the $17.4Bn Auto rescue plan brought to the markets has eliminated a short-term event risk going into 2009 – where more challenges await the global economy. The EURUSD traded a tight 1.3950 – 1.4040 range in early Asian trading before hitting larger volumes at European Open. These more subdued moves come after a week of record price action as the dollar slid against all currency pairs – dropping a massive 16.6% since the 5th of December. The USDJPY reacted most to the announcement of the Auto bailout in the U.S, turning on itself, rising from its 15 year low of 87.15 back to and testing the 90.00 levels this afternoon. Since Friday the Yen has given back to the dollar on renewed risk appetite – up a tentative 1.5%. The Yen’s stellar advance in the past 3 months has seen a decline as the BoJ cut rates near 0% last week and further bad economic news hits the news wires – Trade deficit at record lows -26.7% annualized and further stimulus packages in the works. While we anticipate very thin volumes during the Christmas break the Dollar seems to be set to remain strong as renewed risk appetite and repatriation continues. While we haven’t mentioned it as of late, the “cash is king” maxim is still very much alive.
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