Mid-Day Report: Dollar Weakens as Consolidation Continues, FOMC Minutes Next
Dollar is sharply lower against European majors in early US session as consolidation continues. Technically speaking, as discussed in our technical outlook reports, more upside is still expected in EUR/USD and GBP/USD. Meanwhile, USD/CHF retreats sharply after edging higher to 1.2082 earlier today. Dollar index’s dip below 4 hours 55 EMA argues that some more pull back should be seen before resuming recent rally. Elsewhere, Crude oil, rides on dollar’s retreat and rebounds strongly from intraday low of 53.66 to above 55.6. Focus will now turn to FOMC minutes for inspirations on further volatility. Though, ,markets are pricing in 90% chance of another 50bps cut from Fed on Dec 16 and the minutes will likely have little impact to this view based on current economic and inflation outlook. Read the rest of this entry »

Mid-Day Report: Dollar and Yen Rallies Continue, BoC Cut 25bps Only
Dollar extends rally is early US session with dollar heading closer to 84 level. EUR/USD’s break of 1.3258 low earlier today triggered some stop orders on long positions which aided dollar’s rally. In addition, Euro is pressured by renewed speculations that ECB will cut rates again as the downturn in Eurozone economy is intensifying. The greenback is also boosted by weakness in commodity prices which see gold breaches $770 level while crude oil weakens to below $73. Dollar demand for settlement of Lehman Brothers CDS as well as hope for second stimulus package from US government continue to support the greenback too. On the other hand, the Japanese also strengthens further after FTSE 100 and DAX turned negative follow a brief rally earlier today. US stocks also opened mildly lower.

Bank of Canada cut overnight target rate by 25bps only to 2.25%. Markets expected a 50bps cut. The bank said in the statement that together with the 50bps cut on Oct 8, there are already 75 bps cut and should provide timely and significant support to the Canadian economy. The bank also noted that policy rate was lowered by accumulative 225bps since last December. Though, easing bias is still maintained as “some further monetary stimulus will likely be required.” The less that expected rate cut provided little support to the Loonie as USD/CAD is set to retest 1.2129 high.

Elsewhere, Sterling also softens in general today after CBI reported that balance of UK firms who had seen total order book levels deteriorate over the third quarter fell to -39%, the lowest level since October 2003. Swiss Trade surplus was unchanged at 1.44b in Sep. RBA Governor Stevens said earlier today that the aggressive rate cut and fiscal stimulus will “lessen the extent of the likely slowdown in Australian’s economy”. Measures by central banks to improve liquidly seemed to be working well and there risk of a “global catastrophe” has improved. New Zealand CPI rose 1.15% qoq in Q3, pushing yoy rate to 18 year high of 5.1% as expected.
By ActionForex

Dollar continues to ride on hope of a second stimulus package from the US government. Dollar index remains firm above 83 level and is set to extend recent rally. USD/CHF took the lead yesterday by breaking 1.1486 high and extends strength to 1.1544 today so far. EUR/USD edged down to new 19 months low. More importantly, note that the Japanese yen is catching up with the strength in dollar and rises against all major currencies. Markets are generaly cautious over Lehman CDS settlement today and the relatted impact on the credit markets. Such concern will likely provide further short term support to the dollar and yen.

RBA Governor Stevens said earlier today that the aggressive rate cut and fiscal stimulus will “lessen the extent of the likely slowdown in Australian’s economy”. Measures by central banks to improve liquity seemed to be working well and there risk of a “global catastrophe” has improved. New Zealand CPI rose 1.15% qoq in Q3, pushing yoy rate to 18 year high of 5.1% as expected. Looking ahead, the economic calendar is rather light today and main focus is on BoC which is expected to cut rates by 50bps to 2.00%.
By ActionForex

Mid-Day Report: Dollar Strengthens on Talk of Second Stimulus Package

Dollar strengthens in early US session after Fed Chairman Bernanke said that additional fiscal stimulus package should be considered to help improve “access to credits” by consumers, homebuyers, businesses and other borrowers given the “extraordinarily uncertain” economic outlook. In his testimony to House Budget Committee, Bernanke said that such actions might be “particularly effective” at promoting “economic growth and job creation.” Dollar index soars to as high as 82.92. USD/CHF is back pressing 1.1486 high and could be resuming recent up trend. The Japanese yen is also mildly higher against most major currencies except the dollar.

On the data front, US leading indicators unexpectedly rose 0.3% in Sep, above expectation of -0.3%. Canadian wholesales sales dropped -1.5% mom in Aug. UK PSNCR rose sharply from 5.07b to 12.6b in Sep. UK Rightmove house prices posted -4.9% yoy fall in Oct, the biggest annual decline in at least six years. Australian PPI rose faster than expected by 2.0% qoq in Q3 with yoy rate up from 4.7% to 5.6%. Germany PPI rose 0.3% mom, 8.5%, also above expectation.
By ActionForex

(CEP News) - The U.S. government plans to issue more debt in the current quarter than any time in history, the Department of Treasury said on Monday.

In the July-Sept quarter, the Treasury plans to borrow $171 billion in marketable debt. It is the highest amount for the second fiscal quarter and the second-highest amount for any quarter.

Borrowing for the quarter is up $59 billion from last year. The Treasury said the borrowing increase is due to the fiscal stimulus package, as well as to cover lower state and local government series issuance.

In the following quarter, from Oct-Dec, the Treasury said it plans to scale back borrowing to $142 billion. The total for the fiscal 2008 year is estimated at $555 billion.