New Zealand Dollar Falls on Central Bank Governor Interview

The New Zealand dollar started this week losing versus the greenback and the yen as higher-yielding currencies attractiveness declined while risk aversion grew among traders globally, shunning investors from assets in the South Pacific region.

After a radio interview in which Allan Border, Reserve Bank Of Newzealand Governor, stated that a strong kiwi is affecting the nation’s exports performance, the New Zealand currency declined versus most of the 16 main traded currencies, also influenced by a negative performance in Asian stock markets, mainly in China, where the Shanghai Composite Index declined more than 6 percent, decreasing attractiveness for the relatively riskier trading options in New Zealand and Australia.

A decline in the kiwi rates will be extremely favorable for New Zealand’s economic recovery, according to specialists. The bullish patterns perceived in the last two months for the New Zealand currency may delay the recovery in the South Pacific nation, as a strong currency declines competitiveness for a country’s products, but as long as volatility remains high, with multiple reports proving support for contradictory speculations, it will be difficult to determine how well the kiwi will perform, as well as the New Zealand economy as a whole, considering its export-oriented profile.

NZD/JPY traded at 63.45 as of 10:54 GMT from an opening rate of 63.74 yesterday. NZD/USD followed the same trend, being traded at 0.6839 from 0.6815.

US Dollar Rallies as Durable Goods Orders Surge, Japanese Yen Gains on Uneasy Risk Appetite

Written by Terri Belkas, Currency Strategist

• Euro Breaks Below Support Despite Rise in German Business Confidence
• British Pound Breaks Down vs. US Dollar, Outlook for GBP/JPY Looks Bleak
• New Zealand Dollar Down Ahead of NZ Trade Results

US Dollar Rallies as Durable Goods Orders Surge, Japanese Yen Gains on Uneasy Risk Appetite
For the second day in a row, surprisingly strong US data did little to spur risk appetite as investor optimism has been exhausted. That said, the US dollar did show a positive reaction to the news, suggesting that fundamentals may start to play a greater role in price action for the currency. Indeed, US durable goods orders surged 4.9 percent in July, the biggest rise in two years, as the ultra-volatile non-defense aircraft component jumped by 107.2 percent as Boeing orders doubled in July to 44 from 20. However, durable goods orders excluding transportation only rose 0.8 percent, and non-defense capital goods orders excluding aircraft - a gauge of business investment - actually fell for the first time since April, suggesting that this surprisingly strong number is a misleading sign of growth.

Adding to the mix, US new home sales rose for the fourth straight month in July, this time by 9.6 percent, the sharpest increase since February 2005, to a ten-month high of 433,000. A further breakdown shows that supply levels fell to 7.5 months from 8.5 months as median prices fell slightly from the previous month to $210,100, though values are still down 11.5 percent from a year ago. In coming months, there is potential for sales to remain supported by lower prices and the US government's first-time home buyer tax credit of up to $8,000. However, the program expires on December 1, and with unemployment rates likely to rise further, a significant downdraft could hit the sector once again.

The second round of US Q2 GDP estimates is due to hit the wires, but the results will only be market-moving if we see revisions. The preliminary reading is forecasted to be revised down to -1.4 percent from -1.0 percent, though this would still represent a sharp improvement from Q1, when GDP plunged 6.4 percent. Readings in line with expectations may not have a very big impact on price action, but better-than-anticipated results could lead carry trades higher, especially in light of speculation that the recession may have ended in Q2. On the flip side, surprisingly weak numbers could crush these hopes and trigger the return of risk aversion.

Euro Breaks Below Support Despite Rise in German Business Confidence
The euro initially jumped this morning following the release of the German IFO business confidence survey, but subsequently dove on broad US dollar demand. The IFO index rose to 90.5 in August from 87.4, marking the fifth consecutive increase and beating expectations for a rise to 89. It looks like the steep rally in equities in July along with Germany's 85 billion euro stimulus package has helped to boost sentiment. However, with the growth seen in Q2 anticipated to moderate later in the year, sentiment may follow suit. Looking to EURUSD, the pair broke below support and former resistance at 1.4260, and though solid support has come into play at 1.4210, the ability of the DXY index to hold above a key trendline connecting the July 2008 and August 2009 lows indicates that the greenback remains within an uptrend.


British Pound Breaks Down vs. US Dollar, Outlook for GBP/JPY Looks Bleak
The British pound remained one of the weakest major currencies as GBPUSD broke below a rising trendline connecting the June and July lows, leaving the door open to further declines. Meanwhile, GBPJPY also experienced a steep drop, but failed to break below the July 17 and July 22 lows of 152.31/39, but based on the GBPUSD decline, there is potential for the JPY cross to follow suit. As mentioned in recent days, the macroeconomic outlook for the nation remains bleak, especially after traders learned last week that the UK government posted a deficit of 8 billion pounds in July, the biggest since recordkeeping began in 1993, highlighting the dour state of the nation's finances. Standard & Poor's lowered its outlook on the UK's AAA credit rating to “negative” from “stable” in May for this very reason, and if we see this trend continue, the risk for an actual downgrade will grow and put greater pressure on the British pound.

New Zealand Dollar Down Ahead of NZ Trade Results
According to forecasts published by Bloomberg News, the New Zealand trade deficit is projected to have narrowed during July to NZ$150 million from NZ$417 million due primarily to a drop in imports. In fact, imports are anticipated to slow to NZ$3.3 billion from NZ$3.62 billion, while exports are projected to slip to NZ$3.15 billion from NZ$3.2 billion. With the recent improvements in the New Zealand economy, imports have held up rather well, which has been the main driver of the drop in the trade balance last month. However, a further decline in exports will hurt the case for a global economic recovery, and thus, a New Zealand economic recovery. Overall, a surprise widening of the trade deficit should impact the New Zealand dollar the most, and could lead pairs like NZDUSD and NZDJPY lower.

The latest market alerts and analysis

Lower capital inflows. US long-term capital inflow fell to US$11.2bn in April from US$55.4bn the previous month as some central bank Treasury holdings were reduced and this will tend to weaken dollar sentiment

Crude Oil Puts Mexican Peso Further Down

The Crude oil has been declining this week as uncertainties towards its demand have been rising on markets globally, Mexico, one of the biggest suppliers of oil to the United States, is witnessing a severe decline on its national currency as the demand for crude oil falters.

The Mexican currency has been one of the most volatile these days, influenced by constant sentiment changes in global financial markets, which affect the crude oil rates and consequently the sentiment towards the peso, since Mexico is a key-oil exporter to the United States. This week losses are the sharpest in more than a month, directly related to crude oil rates.

USD/MXN traded at 13.11 as of 21:39 GMT from an opening rate today of 13.02.

Oil zooming after break to new highs

Oil is adding to its gains, rising to $74.20, new highs for the year. The buck is selling off as well as the two do a dance. Gold has perked up as well, up to $957 from the low $940s yesterday.

1.4351 remains resistance for EUR/USD.

Last gasp Fibo at 1.4351 before range highs

EUR/USD is closing in on 1.4351, the 76.4% retracement of the 1.4446/1.4045 decline. Strong Europian PMI.data, doubts from joe stiglitz on the dollar’s reserve role and a break-out to the topside in oil have given the markets the ammo they need to push for the topside. Steadier Chinese stocks and firm US shares are a bonus, suggesting correction, not collapse.

Above 1.4413 is next chart resistance ahead of 1.4445 resistance and 1.4450 barriers, which are growing in size by the day.

Be nimble, be quick and get the heck out near the top of the old candlesticks ahead of 1.4450!

China increases interest in $1.3950/1.4450 dnt

I’m just getting reports that China yesterday increased it’s interest in the $1.3950/1.4450 dnt option structure.

European Morning Wrap Up; risk on

• Australia’s Treasurer Wayne Swan says romove tax on government bonds to make them more attractive
• Shanghai share index ends up 1.7%
• French August flash manufacturing PMI 50.2, up from 48.1 in July, highest read in 15 months. Services 48.9, up from 45.5. Composite 50.9, up from 47.3, highest read in 15 months
• German August flash manufacturing PMI 49.0 better than median forecast 47.0 and highest read in 12 months, services 54.1 better than median forecast 48.6 and highest read in16 months . Composite 54.2 and highest read in 15 months
• Euro zone August flash manufacturing PMI 47.9 better than median forecast 47.5 and highest read for 14 months, services 49.5 better than median forecast 46.5 and highest read for15 months, and highest read in 15 months

Risk on. Sentiment boosted by release of better than expected European PMI data.

EUR/USD having started off around 1.4215 has been as high as 1.4335 so far. There have been muttering of Asian central bank sales above 1.4300, but personally haven’t been able to confirm such. China probably won’t leave it too much longer before it makes a concerted stand to slow the rally given it’s well-touted dnt option interest. We’re presently at 1.4325.

The market will have also noted .The Nobel-prize winning economist feels the dollar’s role as a good store of value is “questionable” and feels the currency has high degree of risk.

Cable has had a good morning. Having stood around 1.6440 it’s been as high as 1.6577 so far, bolstered by better risk sentiment.

USD/JPY touch firmer, JPY weak across the board given improved risk appetite. USD/JPY at 93.85 from early 93.60. Sources note layered sell orders from 94.00 up through 94.50.

Aussie has had a very good morning, obviously bolstered by better risk appetite. But the move by the Australian government to remove interest withholding tax (IWT) on government bonds, to make them more attractive, will also have given aussie a good fillip.

AUD/USD having stood at .8235 in early Europe is presently up at .8330.

EUR/USD continues higher

EUR/USD continues to rally, presently up at 1.4325, having been as high as 1.4334.

The euro is being underpinned by the release of better than expected European PMIdata and rallying European stocks.

So far I’ve had no concrete confirmation of Asian central bank selling, although there have been vague mutterings. I still think China will not let this rally gather too much momentum given their well-touted dnt option interest.

Cable extends gains above 1.6500; sell orders noted

Cable has extended it’s gains above 1.6500, presently at 1.6535. The move comes with European stocks heading higher, risk appetite in decent shape after the release of better than expected European PMI data this morning.

Technical resistances now 1.6545/50 and 1.6580.

Talk of some sell orders now lined up at 1.6540/50, but not thought to be overly large. Will be interesting to see whether they’re enough to hold back the present rally.

Pound Climbs on Renewed European Optimism

The pound climbed today versus the yen and the dollar, as optimistic reports in Europe brought worldwide traders to bet in a hastening economic recovery in the region, damping demand for safer assets and increasing risk appetite.

The pound benefited today from a report in Germany indicating an unexpected growth of 0.3 from the first quarter, being the same figures also perceived in France, while forecasts indicated a contraction of 0.3 percent for both countries. The pound also benefited today from an improved sentiment in stock markets that pushed high-yielding currencies like the South Korean won to the highest rise in a week, making investors which were again confused by negative reports to return to riskier positions in search for higher yielding operations.

Today’s reports in both Germany and France, were highly unexpected and changed traders, investors and analysts perspectives regarding the future economic conditions in the European Union, since these countries lead a main role regarding the bloc’s financial health, and a rebound in the region must derogatorily rely on their stabilization. Despite this fact, the United Kingdom has a more delicate financial system and current situation than the Eurozone, being the credit system more similar to Eastern European countries, which may result in a longer period of recession for both regions than for the countries which adopted the euro.

Euro Continues Rally on Eurozone Members Growth

The euro gained versus the dollar and other several currencies today as countries like Germany and France indicated a unexpected growth for the previous quarter, surprising traders and analysts, raising the positive sentiment towards the Eurozone currency.

A perfect scenario for a bullish pattern in the euro-dollar chart was set today as the German and French economies grew in the second quarter, as the Federal Reserve affirmed yesterday that interest rates in the United States shall remain low for an extended period of time, forcing the dollar down versus most of the 16 main traded currencies. Today, speculations indicate that a report is likely to show an economic rebound for all the current Eurozone country members, which is also favoring the outlook for the euro, which has been bearish since last week when it reached the highest level in months.

The euro is likely to remain high during the day if the report confirms the Eurozone diminishing contraction. Risk has returned to markets, and signs coming from main economies in Europe like Germany and France helped the euro to pare half of last risk aversion wave losses in the beginning of the week, but it is hard to determine until what level it may climb, since markets remain highly volatile.

Polish Zloty Down as Rally May Halt Economic Growth

The Polish currency, which was climbing systematically during the previous two months as signs of economic recovery attracted traders to this emergent European Union economy, had a sharp decline this week as the current currency rates may affect the economic recovery in the nation.

Poland’s economy was the best performer among the 10 eastern European union members in the first quart of this year, after the national government cut taxes to stimulate the economy the zloty climbed 14 percent versus the euro, a rally which is raising concerns about the future conditions of the Polish economy. Today the zloty had the sharpest fall in two months, leading a day of declines in the currency market for eastern European countries, as pessimism brought investors back to safer markets.

Brazilian Real Declines Further on China’s Industrial Output

The Brazilian real is having its worst week since the beginning of July as pessimistic news rose risk aversion among traders, damping demand for the Brazilian currency high-yielding profile.

Today several reports in China brought equities and commodities markets down as exports and loan conditions deteriorated in the Asian country, raising concerns that one of the key-world economies may face an extended period of recession, affecting emergent market currencies like the South Korean won and the Brazilian real, which is at the lowest level since the beginning of August.

Chinese Industrial Outlook Decline Pushes Yen Up

Several negative numbers in China today brought worldwide investors to purchase yen-priced assets as pessimism and confusion regarding the global economic situation have returned to financial markets, favoring the safe profile of the Japanese currency.

The yen gained versus most of the 16 main traded currencies today after reports in China posted a worse-than-expected rise for the national industrial output also indicating negative exports and new loans numbers, raising risk aversion among traders this Tuesday. The South Korean won was one of the biggest losers versus the yen as the Asian nation’s affirmed that it will maintain an accommodating monetary policy, damping demand for the won. The Australian and the New Zealand dollar also posted sharp falls versus the yen as stocks markets went down worldwide, which is negative for commodity-linked currencies like the Aussie and the kiwi.

Analysts suggest that the falling Chinese lending numbers will make it harder for equity markets to be sustained at high levels, and the yen benefits from this negative scenario in stock exchanges around the world. Volatility still remains extremely high as levels of risk appetite and risk aversion are changing overnight during the past few weeks, now, with a renewed risk aversion, investors are choosing the yen to invest.

Australian Dollar Down on Chinese Negative Data

The Australian Dollar lost today against several currencies like the yen and the U.S. dollar after a negative report in China pushed investors back to safer assets, damping demand for the Aussie’s riskier profile.

The Australian currency lost the most in a week today after Chinese banking data came worse-than-expected by economists, showing a slide in new lending figures and a disappointing rise for fixed-assets investments, indicating that one of the main global economies may still face further months of recession. The New Zealand dollar as well as its Australian counterpart are considered high-yielding currencies despite the current low interest rates in both countries, and these negative reports in China affected the Aussie and the kiwi today, paring much of last week’s gains versus the yen and the greenback.

USD to EUROWho wouldn’t be interested in a forex trading strategy that requires no interpretation or judgment? That is the claim made by Avi Frister in his ebook "Forex Trading Machine."For anyone not well acquainted with the Forex market there is excellent information presenting forex basics in a simple easy to understand style.For me, having traded the forex for a couple of years now and always curious about different forex trading strategies, the value of this book was found in the last of the 3 strategies Avi Frister explains using price as the signal to enter and exit trades.

Forex: GBP/USD: Pound capped at 1.7005 again

FXstreet.com (Barcelona) - The Pound launched an assault to 1.7000 resistance area during European session, buoyed by encouraging UK services and manufacturing data, although its rally from 1.6950 was capped at 1.7005, before pulling down to levels around 1.6970 at the time of writing.

According to technical analyst at Charmer Charts, the Pound could break above 1.7000 heading to 1.72: "Now today the market does remain looking as though it could trade higher back to 1.7005. Here will be quite crucial. The sellers failing to hold off buyers will see this then trade higher with 1.72 targeted. 1.72 is the measured target from the continuation pattern we experienced all through June and July."

On the downside, failure to break 1.7005 would shape a double top on the hourly charts, says . "If today 1.7005 holds there will be a double top on the hourly charts. This suggests that given the overbought scenario Cable will retrace some of the recent gains to at least its break point of 1.6830. Buyers will be waiting here, but there is scope for the sellers to take them on and drive this lower for 1.6740."

Colombia Peso Gained As Venezuela Concerns Ease; Stks Up

Colombia Peso Gained As Venezuela Concerns Ease; Stks Up

BOGOTA (Dow Jones)--The Colombian peso gained slightly on Friday as concerns about possible trade disruptions with Venezuela eased.

The Colombian peso ended at 2,037.90 to the dollar from COP2,045.30 on Friday amid a session that exchanged $730 million, less than the average $1 billion it trades on a regular day as it is the end of the month.

"Chavez has threatened Colombia many times in the past and nothing has happened. I don't see trade disruptions happening this time because the diplomatic spat is not that severe," said German Grijalba, analyst at Banco Popular.

On Tuesday evening, Chavez froze diplomatic relations with Bogota while threatened Colombian companies on Venezuelan soil with expropriation. He also pledged to break commercial ties if there is any new "aggression" from the neighboring country.

The deteriorating ties follow accusations from top officials in Bogota that Swedish-made rocket launchers sold to Venezuela were found in the hands of the Revolutionary Armed Forces of Colombia, or FARC.

As a result, Chavez ordered the withdrawal of his ambassador to Bogota.

On the equity market, the IGBC stock index rose 0.6% to 10,329.95 points.

The most-heavily traded stock was state-owned oil company Ecopetrol (EC), which rose 0.4% to COP2,775.

On Friday, crude-oil futures settle at a one-month high as the dollar plunged against major currencies. September settles at $69.45 a barrel, up $2.

Shares of the country's largest cement company Cementos Argos (CEMARGOS.BO) closed 0.6% higher to COP9,100. Shares hit as much as COP9,300 earlier Friday after the company agreed to buy cement grinding stations in Panama and the Caribbean from Switzerland's Holcim Ltd. (HOLN.VX).

Meanwhile, the yield on the benchmark local peso-denominated bond, known as TES maturing in 2020 ended at 8.876% from 8.92% on Thursday.

Dollar plunged as Wall Street ended a great July

FXstreet.com (Córdoba) – Markets in US finished mix on Friday. The Dow Jones rose 0.20% and the Nasdaq fell 0.30%. Both indexes ended the week in positive and the Dow Jones finished July with the highest monthly increase since 2002. Gold and oil rallied today rising 2% and 3.75% respectively, after a collapse in the price of the Dollar. Greenback fell across the board losing previous gains and ended near multi-month low.

EUR/USD rallied during the American session rising more than 150. The pair failed to break above 1.4300 but erased previous losses and ended the week with gains for the third time in a row.

GPB/USD jumped above 1.6700 posting a fresh one-month high. The pair rose more than 200 pips after the opening bell at Wall Street and finished the day above 1.6700 for the first time since October 21 of 2008.

Greenback holds at intra-day lows

FXstreet.com (Córdoba) – Greenback collapse across the board has eased in the last hours but it has failed to prolong a recovery. The Dollar has been steady moving near intra-day lows against majors. EUR/USD is moving in ranges between 1.4280 and 1.4250. The pair is 1.40% above today’s opening price.

GBP/USD is near one-month highs trading in ranges between 1.6680 and 1.6720. The Pound is heading toward the third week in a row with gains against the Dollar.

USD/JPY recovery stopped at 94.80 and now is approaching toward the lows of the day at 94.50.

Forex: EUR/USD tests intra-day at 1.4280

FXstreet.com (Córdoba) – The Dollar weakness continues across the board. EUR/USD is near intra-day high at 1.4280 testing those levels, after Greenback recovery found support at 1.4235. The Euro is rallying on Friday against the Dollar. The pair is up 1.40% from the opening price and has recovered form Wednesday loses.

“It looks like the government's popular (up tp $4500 back) cash for clunkers program, it about to be junked. Coming from this group of Washington spendthrifts, excessive cost to the government is cited as the unlikely reason. More likely President Obama, and his keepers of the Chicago Way, are searching for a way receive, in return, a portion of this government largess. Reinstatement of the program will likely occur if some of these details are remedied. The trade Monday should prove to be interesting. Are we getting ready for an assault on the 1.4300 resistance or the 1.4000 support?”

Forex: USD/JPY fins support at 94.50 and rises to 94.75

FXstreet.com (Córdoba) – The collapse of the Dollar against the Yen eased in the last hours. USD/JPY fell finding support at 94.50 and from there rose to 94.75. The mention zone has become a strong resistance for the recovery of Greenback. The pair lost more than 110 pips after from intra-day high at 95.83 and current price at 94.70/74 is 0.85% below today’s opening price.

“Recent stock market strength continues to hurt the yen, as the Japanese desert the safe yen investments for higher yielders elsewhere. In this vein Goldman, this morning, is touting the USD to gain on the yen to perhaps 1.05 by year end. Currently we are trading at 95.25 and though I would prefer to be long, it is probably best to wait until Monday to initiate new trades. The Japanese unemployment at 5.4% is a decade high, and made bode ill fortune in the Aug. 30 election for the party incumbants.”

Forex: GBP/USD post 1.6732 as 1-month high

Fxstreet.com (Barcelona) – The Sterling has risen around 260 pips against the Dollar from 1.6471, intra-day low to break the 1.6575 key resistance and post 1.6732 as fresh 1-month high. Currently, the pair is trading above 1.6700 level, 1.20% above today's opening price.

GBP/USD is rising 1.70% so far this week from Monday opening price at 1.6449 to the current 1.6700. The current week is the third positive week in row.

Forex: EUR/USD finds resistance at 1.4280

Fxstreet.com (Barcelona) – After climbing 190 pips in the American session, EUR/USD seems to have found resistance at the 1.4280 level. Currently the pair is trading around 1.4260/70, posting 1.50% daily gains from opening price.

EUR/USD is closing its three positive week in row after easing all of initial losses from 1.4005 to trade around 1.4260/70 and post 0.40% weekly gains from Monday opening price at 1.4230.

Anna Coulling, analyst at Master The Markets, “EURUSD powers through all three moving averages to break above 1.42 as S&P and DOW hold onto gains although volume in both is pitiful. USDJPY finding support at 14 day moving average refusing, so far, to break below 97.73. Cable too pushes up beyond 1.66 so risk appetite is firmly back on the menu this afternoon providing Friday afternoon currency traders with plenty of two way action. With S&P likely to close on a doji candle and very little volume August promises to be an interesting month.”

Forex: USD/CHF drops below 1.0700

Fxstreet.com (Barcelona) – Dollar is collapsing across the board and the USD/CHF is not an exception, The pair is falling an strong pace in the American session, dropping more than 160 pips from 1.0860 to trade below 1.0700 level and post 1.0685 as fresh intra-day low.

Currently the pair is trading around 1.0685/95, 1.75% below today's opening price. USD/CHF is closing the week with 0.40% weekly losses from Monday opening price at 1.0697 and after losing all of previous gains. This is the four negative in row.

Forex: USD/JPY collapses to 94.50

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Forex: USD/JPY collapses to 94.50

Fxstreet.com (Barcelona) – USD/JPY has fallen around 100 pips in the last hour to trade below 95.00 level and post 94.48 as fresh intra-day low. Pair has continued, thus, with its rejection movement from 95.85 in the European session.

Currently the pair is trading around 94.70/80, 0.85% below today's opening price.

Valeria Bednarik, collaborator at FXstreet.com, comments that .Dollar fell against European rivals with Euro quoting above 1.4160 level and Gbp again regaining 1.6500. Stocks remain positive, yet Japanese Yen continues appreciating after failing to break above yesterday’s 95.88 against greenback, reaching an intraday low of 95.10."