Daily Forex Analysis by Finexo.com 23/11/2009


Investors continued to downsize their risk holdings as stocks and commodities slid again while the Dollar reaped the benefits for a second straight session. Many see this as an overdue bounce for the Dollar which has been down close to 15% since the first quarter of 2009. As worry over the Dollar’s credit rating as well as rising deficits and national debt in the US sparked a flight from the Dollar, other investments such as oil and Gold, which recently hit an all time high. As the year winds down analysts expect profit taking from the 9 month boom of alternative investments to continue. This would spell good news for the Greenback.

At the close the Dollar was up 1.1% to the Euro to 1.4859, up 1.22% versus the British Pound, up .33% to the Canadian Dollar to 1.0704, up .14% against the Australian Dollar to .9144 and up .19% to the Swiss Franc to 1.0175. The Dollar did fall 1.14% against the Japanese Yen signalling that the interest in the Dollar’s resurgence is not as stable as people would like right now.

The ICE Futures US Dollar index, a non-traded indicator which measures the USD’s performance against six major currencies, was up on the day at above 75, well above a 15-month low of 74.679 which it fell to earlier in the week. The jump was due however to what traders call a “faulty trade” which saw a double in average daily volume after the contract sold off at 76.50, a number never reached. This sparked a wave of limit orders which were cancelled upon clearing after the session.

Chart: NZD/JPY

The New Zealand Dollar suddenly became vulnerable to the combination of the sell-off in risk and the OECD report encouraging the Reserve Bank of New Zealand to keep rates low due to a fragile economy. The combination has led to some impressive downside for the NZD/JPY, which now appears to be developing a rather large head and shoulders formation. It will be interesting to watch the behavior of the pair if the neckline is breached in coming weeks.


Written by Finexo.com