Aversion Weakens The Yen

USD is trading mixed against the majors - weaker against the commodity currencies (CAD, AUD, NOK, NZD) and stronger against most European FX. Uncertainty arising from elections in Europe saw an increase in risk aversion which is seeing UST yields lower. The decline in Treasury yields is also a result of Fed policy expectations as hopes for QE3 are supported following Friday's weak employment report. Despite the option of QE3 being on the table, we maintain the view that it will take a significant deterioration for the Fed to provide more stimulus. While both risk aversion and QE3 hopes depress Treasury yields, they have adverse effects on the USD. Risk aversion is supportive of the buck as investors seek safety in Treasuries and QE3 speculation weakens the dollar as it suggests the Fed ...

Dutch Fears Trump French Elections If you looked at the headlines from the weekend you may have thought that risk was poised to rally today. The first round of the French Presidential election was a tighter race than expected. Socialist Hollande won 27.1% of the vote while Sarkozy was not that far behind with 26.7%. The French left, which has called for ECB rate cuts and a re-negotiation of the EU's Fiscal Pact, did less well than expected, which should have calmed markets this morning. However, weak economic data out of the currency bloc combined with fears about the Dutch triple A credit rating has caused risk aversion to grip the markets at the start of this week. Dutch budget wrangling hurts risk sentiment The Netherlands has overtaken France as the largest political risk this week ...

Fundamental Analysis EUR "Market stresses will eventually force the ECB to restart the bond program" - Market stresses will eventually force the ECB to restart the bond program The European Central Bank is expected to restart government bond purchases rather than proceed with another round of long term refinancing operation. USD "Disposable incomes of consumers are still being squeezed. That does make it difficult for consumption to accelerate from here" - Jeremy Lawson, an economist at BNP Paribas in New York U.S. consumer confidence deteriorated slightly in April. The Thomson Reuters/University of Michigan’s preliminary index of sentiment declined to 75.7 from 76.2 in March. GBP U.K. "has a wealthy, open, and diversified economy" - S&P Standard & Poor's reaffirmed the U.K.'s triple ...

Fundamental Analysis EUR "...markets have been overoptimistic after the extra liquidity provided by (the European Central Bank). We will see stocks moving lower" - Christian Tegllund Blaabjerg, chief economist at FIH Erhvervsbank Shares closed mixed on Thursday. The Stoxx Europe 600 Index gained 0.12 per cent to 259.07. Germany's DAX Index retreated 0.13 per cent and France's CAC 40 Index gained 0.19 per cent. The U.K.'s FTSE 100 Index rose 0.35 per cent to 5,723.67. USD "The economy does continue to grow, but slowly" - John Carey, a fund manager at Pioneer Investments U.S. stocks fell on Monday after a report showed the U.S. economy added less jobs than expected. GBP "Negative sentiment turned positive as Spanish bond yields retreated following an earlier spike" - Angus Campbell, the ...

(Reuters) - Asian shares edged down on Tuesday as fears about the ability of politicians on either side of the Atlantic to tackle huge debt burdens sapped investors' confidence in the outlook for Western economies. The dollar held gains near a 6-week high against a basket of currencies, with European banks scrambling to secure dollar cash as money markets seize up, and equity volumes were thin, indicating that risk aversion remained high. "There is no fundamental change in the markets' risk averse mood. There's been no clear progress in the euro zone," said Koji Fukaya, chief foreign exchange strategist at Credit Suisse. Shares in China and Hong Kong were hit after central bank data showed Beijing may have sold foreign currency to prop up the yuan for the first time in four years in ...

Last week, one of the most notable trends in the market was the bullish euro. By Friday, the euro was once again boosted on speculation that the ECB will hike interest rates in February. Today, several economic releases are expected from the euro-zone. Will the euro see another bullish session? Economic News USD - Dollar Closes a Bearish Week Following Weak U.S. Economic Data The U.S. dollar fell against most of its major currency counterparts during last week's trading session. The dollar saw a 300 pip fall against the euro and a 250 pip drop against the British pound. As a result, the EUR/USD has crossed the 1.3700 level and the GBP/USD is trading near the 1.6250 level. The dollar depreciated last week against most of the major currencies following disappointing economic releases ...

The euro strengthened yesterday against most of the major currencies after reports showed better-than-expected figures for the U.S. economy. In a speech yesterday, German Chancellor Angela Merkel called to strengthen the euro, stating that the euro is the foundation of German prosperity. Economic News USD - U.S. Dollar Weakens As Risk-Appetite Rises The U.S. dollar saw a bearish trend against most of the major currencies during yesterday's trading session. The dollar fell about 90 pips against the euro, and the EUR/USD pair rose above the 1.3300 level. The dollar also saw a 100 pip drop against the Swiss franc. The dollar fell after several positive economic releases from the U.S. boosted risk-appetite in the market and increased demand for higher-yielding assets. The initial jobless ...

Positive U.S. Data Boosts Risk Appetite and Weakens the Dollar Monday, 27 Sep 2010 The U.S. dollar fell against most of the major currencies during last week's trading session. The dollar lost about 450 pips against the euro. The EUR/USD pair is currently heading towards the 1.3500 level. The dollar dropped about 200 pips against the British pound and about 150 pips vs. the Japanese yen. The dollar's downfall came after several positive U.S. economic indicators were released last week. The U.S. sales of previously owned homes rose in August to a 4.13 million, up from 3.84 million in July. The result was above the predicted result of 4.11 million. In addition, the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items, climbed in ...

As speculations that last week's spike in yen value was the result of another intervention from the Bank of Japan remain unconfirmed, Governor Shirakawa says that the BoJ is prepared to take appropriate action if needed. Despite Japanese efforts, the yen continues to strengthen. Is another intervention simply a matter of time? Economic News USD - Positive U.S. Data Boosts Risk Appetite and Weakens the Dollar The U.S. dollar fell against most of the major currencies during last week's trading session. The dollar lost about 450 pips against the euro. The EUR/USD pair is currently heading towards the 1.3500 level. The dollar dropped about 200 pips against the British pound and about 150 pips vs. the Japanese yen. The dollar's downfall came after several positive U.S. economic indicators ...