Daily FX Market Outlook-22-11-2010 by AceTrader

Market Review – 19/11/2010 21:06 GMT

Euro pares its gains against dollar despite Ireland’s bailout hope

The single currency rose against dollar as investors expected Ireland would get its bailout in the coming future, however, worries over the risk of contagion to other European countries together with the raising of bank’s reserve requirement by the Chinese central bank pressured euro and other currencies in NY session.

  
  
Although euro dipped briefly to 1.3608 in Asian mid-day on risk aversion due to the strong retreat in commodities, good buying by Middle East name lifted euro above Thursday’s high of 1.3668 in European session. Despite immediate knee-jerk reaction after China central bank announced to raise reserve requirements of Chinese banks by 50 basis points (this was the 2nd time in 2 weeks and the 5th increase this year) to curb banks’ lending, euro briefly climbed to 1.3733, the pair retreated to 1.3630 in NY mid-day due to dollar’s broad-based rebound before recovering near closing.  
  
Versus the Japanese yen, the greenback fell from 83.66 to 83.14 in European morning, however, buying interest quickly emerged and dollar rebounded back to 83.59 partly on cross-selling of yen in NY afternoon. In other news, U.S. Fed Chief Bernanke defended Fed’s early QE2 move at the ECB’s Conference in Frankfurt. He dismissed claims that such action would debase the greenback and said ‘the best way to continue to deliver the strong economic fundamentals that underpin the value of the greenback, as well as to support the global recovery, is through policies that lead to a resumption of robust growth in a context of price stability in U.S.’ His comments gave a dollar a lift in NY morning session.  
  
The British pound rallied in tandem with euro in European morning to 1.6095, however, heavy offers at 1.6090/00 capped intra-day gain and long liquidation pushed price lower, later, cable tanked near London mid-day as U.K. Telegraph reported that the influential think-tank OECD had cut U.K. 2011 growth forecast from 2.5% to 1.7% and explained that austerity measures posed ‘headwinds’ to British growth. Sterling eventually sank to 1.5936 before staging a recovery in NY afternoon due to dollar’s broad-based retreat.  
  
Economic data to be released next week include:  
  
EU Consumer Confidence, U.S. Chicago Fed Nat. Act. on Monday, Germany GDP, Gfk index, Services PMI, Manufacturing PMI, EU Services PMI, Manufacturing PMI, U.S. GDP, GDP deflator, Personal consumption, PCE, PCE core, Home Sales, Home Sales change, Canada CPI core, CPI, Retail sales on Tuesday, Germany Ifo index, U.K. GDP, EU Industrial orders, U.S. Durable goods, ex. Defense, ex. Transport, Jobless claims, Consumption, PCE core, PCE index, Personal income, U. Michigan survey Final, New homes change, Home Price, Building permits, Change of building PM on Wednesday, Germany Import price index, Swiss Payrolls, U.K. CBI distribution trade on Thursday (U.S. is closed for holiday), Japan National CPI (core), National CPI, Tokyo CPI, Germany CPI prelim, HICP prelim, Swiss KOF indicator on Friday.

http://www.acetraderfx.com