pounds to us dollar made a strong showing on the Barclay's news

Foreign Exchange : The US dollar Exchange Rate is losing ground this morning across the board on a reduction of risk aversion, which was occasioned (oddly enough) by Barclays' saying that it had such strong earnings last year that it doesn’t need to ask the UK government for a capital injection. The foreign exchange market is very thin because of the Chinese New Year that has closed most markets in Asia, and foreign exchange traders are also somewhat confused by the giant rise in oil and gold on Friday. This seems to be the key reason for the Canadian dollar to be coming back strongly against the US Dollar rate.

On Friday the market pared short euro positions for no particular reason we can find except profit-taking and the desire to be square in case something happened over the weekend. During the day, the euro exchange rate rose from 1.2763 before the New York open to a high of 1.3035 in the afternoon before leveling off. Today it slumped until Europe came back in and caused a recovery to 1.3022 so far. If the US market mimics the European market, we could get a test of last week's intermediate high just shy of 1.3100 or 1.3386 from the week before.

Similarly, pounds to us dollar made a strong showing on the Barclay's news, but as the US starts getting active around 8 am, the upmove is already fading. The Japanese yen remains firm although on the north side of a pivot around 88.75, but soft against the euro exchange rate around 116. Sakakibara sees the equivalent of parity (100 yen per euro) at some point soon, so these are counter-trend corrections.

the ECB will cut rates next week

Euro Exchange Rate Outlook:

ECB chief Trichet did hint yesterday that the ECB will cut rates next week-it’s possible, he said. The market took no notice. This is the dog that didn’t bark in the night. For Trichet to say such a thing and the foreign exchange market not to move is remarkable. One foreign exchange trader said Trichet has been marginalized by events. We can’t buy that. Institutional events like central bank interest rate cuts are the top factor in short-term moves. What is going on? We deduce that either it was expected and so already built in, or that the unwinding of euro to japanese yen carry trades is a bigger force and since Trichet’s comment was “with the wind,” it was absorbed without the need for comment.

Pounds to euros currently 1.2520

Euros to pounds currently 0.7979

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Barbara Rockefeller
Forex Trading Reports

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Buying Euros - watch the 1.3650 pivot against the US Dollar Exchange Rate

Euro Exchange Rate Outlook : The US dollar appears a little stronger this morning against the majors, with the euro exchange rate having dipped to 1.3347 from 1.3624 at 6 am ET yesterday. But this disguises a lot of choppiness. After the close yesterday, the euro rose from 1.3440 to 1.3517 and then fell again during Asian hours to 1.3343-only to rise back to 1.3518 by 7:40 am ET. This surpasses the interim high late yesterday and so is cause for concern, although we won’t get worried until the euro exchange rate matches a pivot level around 1.3650.

The US dollar to Japanese Yen is also soft as the US day begins, having firmed yesterday from 101.12 to 99.24 overnight. Fear of today’s US data and stock market are pressuring the dollar to Japanes yen higher 100.77 so far today, seemingly on the idea that the US stock index futures, which are rising this morning, will lead the dollar. This may be correct - currency traders are in thrall to global stock indices these days. Bloomberg says “The Japanese Yen weakened on speculation that investors will slow carry trade reversals.” That takes a minute to digest. Sterling, likewise, looks heavy on the re-emergence of risk aversion ands presumably the unwinding of quickie carry trades. Exchange Rate for buying euros against the pound is currently 1.2800

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Barbara Rockefeller
Forex Trading Reports

Buying Euros, Buy Euros at the Best Exchange Rates call

IMS Foreign Exchange for a free quote +44 207 183 2790