Manipulation, But From Who?

USD

The song has remained the same the past two trading days. The USD continues to show weakness and face stiff tests from the other major currencies as the greenback essentially has been put under pressure (apparently willfully) from its own Federal Reserve. While it is not a direct intervention by the U.S. publically, in reality the talk about imminent quantitative easing (the purchasing of U.S. treasuries) has taken the USD to the lowest ebbs of its trends. While there are definitely ranges to be found and trading is seldom a one way avenue there can be no denying the momentum that has occurred the past month. The question is this, when will the USD move be considered to be overdone? Yesterday weekly Unemployment Claims were released and once again turned in a disappointing number, highlighting that the jobless situation in the U.S. remains rather bleak taking into account the fact that the States had enjoyed ‘full’ employment for a large stretch of years.

Today Retail Sales figures will be released from the U.S., but also on the schedule is a pronouncement from the U.S. government which will focus on China and its ‘manipulation’ of the Yuan. Core Retail Sales today are expected to show a gain of 0.4%. Quarterly earnings will also continue to emerge from corporate American and Wall Street has shown a tenacious ability to hold onto its gains. However, Wall Street has also given off signals that its participants are not exactly all positive and the results across the broad indexes have often been mixed. The USD is trading on sentiment surrounding the Federal Reserve and standing in the wake are many nations currencies that have been ‘adversely’ effected. Going into the weekend investors will keep their focus on the U.S. government’s currency dictates and keep in mind that reversals can often appear when unexpected.

EUR

The EUR has sustained its pace against the USD and it has done this even as economic data from Europe continues to turn in lackluster results. Even as some nations within the continent have been rocked by public sector strikes and raging debates about austerity measures and government budgets, the EUR continues to find backing and has now landed at its highest point in nearly a year. Greece, Portugal, and Ireland remain on the proverbial back burner, showing that the EUR continues to pick up steam on a dollar centric run that has been centered on the Fed’s policy. Trade Balance numbers will come from the E.U. today along with CPI data, but the crux of the picture will continue to be the shadow that is being cast from across the Atlantic. Until there is a shift in sentiment from a broad spectrum the EUR will likely find supporters.

GBP

The Sterling has climbed to highs against the USD and finds itself within a historically known value. Like the EUR the GBP does have many issues that have not gone away regarding its own financial foundations, but the Sterling continues to be made stronger by solid backing. There is no major data planned from the U.K. today and the dollar centric sway that the GBP has enjoyed will roll. The question for the Sterling - like all of the other major currencies - is how long can its parade of gains continue against the greenback?

JPY & AUD

Like a song that keeps playing on the radio, the JPY and AUD continue to go to highs against the USD in what has become a consistent theme. A strong JPY does Japan’s export companies no good and it has voiced its concern about its currency, but the BoJ has not chosen to intervene again – as it did last month – as of yet. The AUD is at highs as commodity prices, particularly metals, are strong. The combination of the weak USD and glow of Gold has taken the AUD to near parity with the greenback.

Written by: Robert Petrucci
Bforex Chief Commodity Expert and Forex Analyst
Robert@BForex.com Please contact Robert Petrucci directly with any questions or comments you may have about the analysis.
Market Analysis Disclaimer: The information and opinions expressed in these analyses are solely for general information use and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. Opinions and information contained herein are subject to change without notice. These analyses reports have been prepared without regard to the specific investment objectives, financial situation, and needs of any specific recipient. Bforex does not guarantee the accuracy or completeness of the information contained herein, even though it was obtained from sources believed to be reliable and trustworthy. Furthermore, Bforex does not assume any liability for any direct, indirect, or consequential loss as a result of any person(s) reliance on information or opinions expressed herein.