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Dukascopy Fundamental Analysis EUR Mario Draghi, the ECB President, insisted on Greece to stay in the Euro bloc during his public speech on Wednesday regarding the possibility of Greece withdrawal from the Eurozone. Nevertheless, according to him, the ECB will stick to its anti-inflation mandate. The ECB President's comments came after Irish and Belgian central banks reported that Greek exit would not be disastrous for the Eurozone. USD Jobless claims in the U.S. didn't live up to the expectations that it will decrease by 5K and remained unchanged, at 370K level, in the week from 6th to 12th of May. Amount of people on rolling unemployment claims increased by around 18K while the number of people on prolonged payments decreased by around 45K. 31 out of 52 states or territory's reported ...

Previous session overview The euro dipped sharply across the board in European trading hours Wednesday after reports that Deutsche Bundesbank President Axel Weber will not be a candidate to replace Jean-Claude Trichet as president of the European Central Bank. The reports sent the 17-country currency lower against the dollar, yen and pound, as Weber is famously tough on inflation, and was widely considered as the most likely candidate to succeed Trichet when his contract expires at the end of October. Deciding Trichet's successor is the responsibility of euro-zone heads of government, who are currently engaged in a wholesale reform of the governance of the single currency area. The dip in the euro breathed life into an otherwise quiet trading session in Europe, which saw the dollar ...

The dollar continues to decline against its major counterparts as the dollar index heads south for the fourth consecutive week. Commodities and equities are moving higher and the sentiment over the US economy remains mixed though generally confirmed continued purchases of debt which is keeping the bias negative on the dollar opposed to the expected tightening by other banks on high inflation! We can see this sentiment haunting the euro, especially ahead of the ECB rate decision this Thursday. Inflation is running for the second month above the ECB target areas and data confirmed that the ECB halted its purchases of government bonds last week for the first time in three months which signaled to markets further unease from the ECB’s side over rising inflationary pressures. The euro ...

Well… The rally for the euro (EUR) didn’t have strong legs yesterday. Seems that a strong Factory Orders number here in the US got everyone thinking once again that the all-clear horn has been sounded for the US… The dollar rallied, commodities sold off, and gold lost $34 (as I left for the day). I’ll just say this about the all-clear horn being sounded… If things were so rosy, would the Fed/Cartel/Bernank, be leaving interest rates near zero? Why would the same crew be carrying out their implementation of quantitative easing? And… If you read the Top Ten Currency Stories of 2010, last Friday, you’ll recall that about this time last year, some people (who should know better) were talking about a “recovery”… And the Fed/Cartel/Bernank was talking about removing emergency measures… And by ...

Previous session overview The euro rose modestly on Thursday, with a gathering of European Union heads of state keeping trading subdued as investors sought clues that leaders might forge a consensus on the region's sovereign debt crisis. In Brussels, the E.U.'s leadership began a two-day summit to address the 16-nation currency bloc's debt problems. Nerves were frayed on Wednesday after Moody's Investor Service warned it may downgrade Spain's sovereign credit rating, and Thursday's Spanish debt sales did little to alleviate the pessimism. In largely range-bound U.S. trading, euro traded at USD1.3240, up marginally Wednesday's close. The common currency traded at JPY111.48, up from Wednesday's closing level at JPY111.32. Constructive U.S. data has helped support the U.S. dollar in ...

A chill came over the currencies and metals yesterday, which was about right, when you take into consideration the trading patterns of the past month… Two days risk on; two days risk off, and so on… This time though, the risk off that began yesterday mid-morning, looked to me to be a fundamental move… What? Fundamentals driving currency movements? What, has the world gone crazy? Well… It certainly looked that way… And it all began with the printing of US retail sales… First, let’s take a trip back to Monday’s Pfennig, when I said this regarding what I expected for retail sales… “We’ll also see retail sales for November, tomorrow… and I would have to say that not only is the Butler Household Index (BHI) flashing strong signals for a strong number, but… Remember, gasoline sales are a part ...

Chris was so kind to leave me notes about what happened in Friday’s trading, so let’s listen in to Chris first, and then I’ll pick it up with the overnight activity… The dollar rallied throughout the day on Friday after the October jobs report showed a larger jump than expected and the previous month’s numbers were revised upward. It seems like we have made a shift from the “dollar safe haven” trades of earlier this year. Previously positive economic news for the US would lead to a sell-off in the US dollar as investors would be selling their safe haven investments to move the funds into higher yielding currencies. But today’s positive economic news for the US led to dollar buying as investors feel any positive news on the US economic front may lead to a decrease in the size of QE2. But ...

Huge week for financial markets as several Central Banks will be having their meetings along with elections in the US – some leading economic data is also due out this week (just in case you have not heard). All together, the week should make for some directionless volatility. We suspect that the highlight of the week, the FOMC meeting, will underwhelm the market regarding the size and scope of QE2. While the initial injection will likely fall short of expectations, incremental future asset purchases are going to remain data dependent and thus further easing will be even more conditional. Given this base scenario we expect a slight rally in USD following the FOMC meeting, however we doubt any strong directional move. FX markets are seeing a slow erosion of USD positioning this morning ...

The Canadian dollar traded near parity with its US counterpart after the report showed the new home prices unexpectedly grew in August and as the commodities rallied, increasing the appeal of the growth-related currencies. The New Housing Price Index increased 0.1 percent in August following the 0.1 percent decrease in July. The analysts expected the 0.1 percent drop. November delivery for crude oil, the key Canada’s export, gained as much as 2.2 percent to $83.45 per barrel on NYMEX, while the MSCI Global Index of equities rose 1.5 percent. Jim Flaherty, Canada’s Minister of Finance, said Canada would be the first country among the Group of Seven nations to balance its budget by 2015. The analysts estimated Canada’s trade balance deficit to be C$2.2 billion. The government report on the ...