| CATEGORY: FX |
FX Morning update - US dollar gains overnight on BoJ as RBA hikes |
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By Michael Hewson
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Tue 01 Dec 2009
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LONDON (SHARECAST) - The decision by Bank of Japan to hold an emergency meeting today, and announce a fresh injection of 10trn yen of emergency loans at 0.1% undermined the yen overnight and sent the dollar higher.
Meanwhile the Reserve Bank of Australia raised rates, as expected, by 0.25% for the third month in a row to 3.75%. The Australian dollar traded lower, however after RBA governor Stevens indicated that they may now pause for a few months to monitor the effects of the past few months.
The dollar index traded at slightly higher levels on the back of these announcements briefly poking its head above 75.00, however the dollar will need greater momentum than this to break its down trend of the last few months.
Maybe this weeks US employment report, due Friday might do that?
Sterling has traded sideways on its lows against a basket of currencies after yesterdays consumer confidence figures sent it to its lowest level against a basket of currencies since October.
EURUSD - the Euro has found some support overnight around the 1.4975/80 area, while the larger support remains at the 1.4820/30 area, where the 50 day moving average currently sits. While above 1.4820 support area a further move to 1.5290 via 1.5145 cannot be ruled out
GBPUSD - while sterling remains weak on it's trade weighted index, any dollar recovery could well exacerbate the declines of yesterday, and a break below 1.6270 could well target 1.6000 in the short term. The pound should encounter some resistance around 1.6470/80 and above that at 1.6570
EURGBP - has gained on the back of a weaker pound and is on target to test the 0.9270 level. It could find some interim resistance around the 0.9170 area but momentum should remain positive while above 0.9070.
USDJPY - yen strength still dominates despite the injection of fresh liquidity by the BoJ overnight to weaken the yen. The highs of the last couple of days at 87.10 were taken out but downside pressure only subsides if the market gets back above 89.10 trend line resistance.
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