Daily FX Market Outlook-5-11-2010 by AceTrader

Market Review – 04/11/2010 23:02 GMTDollar falls broadly on risk appetite after Fed decision

The greenback dropped against major currencies on Thursday as the Federal Reserve’s bond-purchasing plan prompted investors to seek higher-yielding currencies and the Australian dollar rallied to a fresh 28-year high.   
Dollar fell from 81.23 to 80.75 against the Japanese yen in Asian morning as Japanese exporters bought yen aggressively. Despite dollar’s recovery on cross-selling in yen due to renewed risk appetite, the greenback dropped sharply to 80.58 after the release of worse-than-expected U.S. jobless claim (which came in at 457K, versus the expectations of 443K and the previous reading of 434K ) and then traded narrowly in NY session.  
The single currency edged higher from 1.4103 and surged in European session due to broad-based buying by sovereign names. Later, euro rose further as ECB President Jean-Claude Trichet said after ECB rate decision that risks to the inflation were slightly tilted to the upside. The single currency eventually climbed to a fresh 9-month high of 1.4283 before retreating due to active cross selling in euro (eur/jpy, eur/gbp and eur/chf fell from 115.42 to 114.45, 0.8818 to 0.8718 and 1.3805 to 1.3585 respectively).  
The European central bank left its benchmark interest rate unchanged at a record low of 1 %.   
The British pound ratcheted higher from 1.6085 and rose above Wednesday’s high of 1.6180 in European morning after U.K. Halifax house prices m/m for Oct came in at 1.8%, 3 times the market’s forecast. Cable later rallied to a fresh 9-month high of 1.6300 in NY morning on cross buying in sterling versus euro after BOE made no change to its asset purchasing plan .   
The Bank of England kept its asset purchasing program unchanged at 200 billion pounds and maintained its interest rate at a record low of 0.5%.  
The commodity currencies rose strongly on Thursday as the Australian dollar rallied from 1.0020 to a fresh 28-year high of 1.0177. Nzd/usd surged from 0.7830 to 0.7976 while usd/cad sank from 1.0112 to 1.0010. Spot gold also rallied to a fresh record high of 1392.60.  
DJI rallied on Thursday and it ended at 11435, up by 220 points or 1.96%. FTSE-100, CAC-40 and DAX also surged by 1.98%, 1.92% and 1.77% respectively.  
Economic data to be released on Friday include:  
Australia RBA’s Quarterly Statement, Japan BOJ rate decision, U.K. PPI core, PPI input, PPI output, EU Retail sales , Germany Industrial prod’n , U.S. Avg. hourly earnings , Non-farm payrolls, Private payrolls , Unemployment rate, Pending home sales, Canada Employment change, Unemployment rate, Building permits.