Daily Forex Analysis by Finexo.com 22/12/2009

USD

Monday saw the Dollar continue its recent rally as investors who had shorted the Greenback earlier in the year were closing out their positions before the end of year holidays. In an extremely lightly traded session, traders who were buying the Dollar were pinning their hopes that early next year will bring about an interest rate hike in the US, signaling the unofficial end to an underperforming two years. The Federal reserve was clear last week when they said that interest rates will remain low for “an extended period.” Traditionally, the term “extended period” means about three to four meetings of the US Central Bank’s policy-setting panel.

At 10:20 PM GMT, the US Dollar was trading up .4% to the Euro to 1.4278, up .75% against the Japanese Yen to 91.16, up .73% versus the British Pound Sterling to 1.604, up .93% to the Australian Dollar to .8815 and up .36% against the Swiss Franc to 1.0462. The Dollar did fall on Monday against the Canadian Dollar, dropping .4% to 1.0622.

GBP

The Pound Sterling had a rough day on Monday after a report came out that claimed Goldman Sachs was threatening to pull a sizeable portion of their staff out of the London offices. The warning was a response to hard-lined British policy on taxing bonuses given to investment bankers, which is said to reach as high as 60%. The finance industry has been an instrumental part of Britain’s growth over the past ten years, turning London into the European New York and making it one of the most influential and important financial locales in the world. Losing a firm such as Goldman Sachs would tarnish the image and perhaps lead to a further flight by other major players.

At 10:30PM GMT, the Sterling was trading down .41% to the Euro to .89, down .38% against the Swiss Franc to 1.6779, and down .01% versus the Japanese Yen to 146.28. The Sterling was up on day, .21% to the Australian Dollar to hold in at 1.8191.

Chart: EUR/GBP

The EUR/GBP had been trying to break down through the 200-day moving average last week, but the pair never managed to close below that Moving Average (now around 0.8870), nor has it yet fully threatened the key line of support around 0.8830 that stretches back to August.

eurgbp

Written by Finexo.com