Easy Pips Daily Forex Trader Update
Three days worth of U.S. economic data was squeezed into Wednesday's session as Americans head for a long weekend. The results were mixed but the market chose to focus on an unexpected improvement in jobless claims. The Canadian and Australian dollars were the top performers while the yen and euro lagged. Markets cheered after the U.S. employment market showed some of its first signs of improvement this year. The S&P 500 wiped out all of the prior day's losses. Initial jobless claims fell to 407K last week - the lowest since July 2008.
The claims report overshadowed the largest drop in U.S. durable goods orders in 21 months in October. Orders fell 3.3% in the month compared to the +0.1% expected. September's data was revised to from +3.3% to +5.0%. Capital goods orders excluding defense and aircraft fell 4.5% compared to the +1.0% expected. U.S. new home sales were also a disappointment but the University of Michigan's consumer sentiment survey was revised higher.
The Canadian dollar was the big winner after oil climbed nearly $3 to $84 per barrel. News that Russia may boost its holdings of CAD also had a positive effect.
Ireland's plan to cut its deficit was not well received. Politicians introduced a four-year plan to cut spending by 20% and hike taxes in order to bring the budget deficit under control. Prime Minister Brian Cowen introduced the cuts in order to receive an 85 billion bailout from the EU and IMF. The euro also declined as Portugal prepared for the biggest strikes in 22 years due to government austerity measures.
Asia-Pacific trading was characterized by a bounce in the currencies that were beaten down on Tuesday but much of the price action was reversed in Europe. The market is shifting its focus to Portugal as the next potential euroarea domino to fall. Five-year credit default swaps hit a record 486 basis points as workers there plan the biggest strike in 22 years in response to government austerity measures. The market was also jolted by news that Standard and Poor's lowered Ireland's credit rating to A from AA-. The euro initially climbed to as high as 1.3419 but tumbled to 1.3282 as European traders arrived at their desks.
German Chancellor Angela Merkel is under fire after saying yesterday that the euro faces an "exceptionally serious" situation. "That irritates me," European Central Bank Governing Council member Ewald Nowotny told Austria's ORF television yesterday. "The euro is not in danger. Individual countries, and the banking systems of these countries, are in danger. You have to make the distinction." Merkel is also pushing to introduce bailout clauses into euroarea bonds issued as early as 2011 - another reason that has been sighted for the 250 pip drop in EUR/USD on Tuesday. Content provided by AroundFX.com
Article Source: FxTradingStock.com
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by: Susan Land
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Date: Sun, 28 Nov 2010
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