The Dollar Strength Continues

Daily Forex Fundamentals | Written by TheLFB-Forex.com | Sep 09 08 03:07 GMT |

Overall, the dollar is strengthening, yet again, in the Asian session. Except for the Japanese yen, the dollar advanced against all the other major pairs. The Euro (Eur/Usd) fell another 40 pips in the Asian session, extending the losses from the past few days of trading. Yesterday, the pair had a very volatile trading session, moving 370 pips between the high of the day, TheLFB R2, and the low of the day, TheLFB S3. The Pound (Gbp/Usd), similar to the euro, had a very volatile trading session yesterday. At the close of the day, the pair fell almost 300 pips, after the pairs trading range reached a whopping 500 pips, from TheLFB R3 to just above S2. In the Asian session, the pair continued to fall, losing another 30 pips. The recent decline in the pound's value made the pair shed every gain made in more than 2 years. The Aussie (Aud/Usd) fell over 70 pips in the Asian session, after two different reports showed retail sales and home loans fell in Australia. Right now, the pair is testing the low of the previous session; any break lower will probably trigger another round of sell-offs. The Cad (Usd/Cad) gained 100 pips yesterday, breaking the 20-day moving average. For the last few days, the pair is trading in a wide range, unable to break anywhere higher or lower. However, the outlook is on the upside, as the decline in crude oil will eventually pull the pair higher. The Swissy (Usd/Chf) traded over a 40 pips range in the Asian session, hovering around the neutral pivot point. Yesterday, the pair closed above TheLFB R2, gaining 130 pips, even if at one point the pair ran out of pivot points. The swissy touched the highest value in 2008 yesterday. The Yen (Usd/Yen) fell 60 pips in the Asian session, reflecting the negative Asian equity market. On its way down, the yen broke underneath the low of the previous session. The daily chart shows the pair is trading just under the 50-day moving average, while the relative strength index is sitting at the 47% line. Asian shares trading lower, again Current Futures: CAC +147.50, DAX +140.50, FTSE +228.00 Asian trade: Asian shares are erasing the gains posted yesterday, as investors remembered the global outlook remains on the downside. The global equity markets surged in the last day of trading, after the treasury had announced the take over of Freddie and Fannie. Yesterday, The Nikkei 225 posted the biggest gain from the last 5 months, while the Topix index, posted the biggest gain in the last 16 years. However, traders have quickly realized that the bailout will not solve too many problems from the financial district. Inflation, high credit rates, weaker retail sales and consumer confidence are still the main problems for the equity markets and the global economy. Commodity stocks and financial companies saw the biggest declines in the Asian session. The Nikkei declined 178.68 points (1.43%) to 12,445.78. The Australian S&P/Asx slipped 88.20 points (1.74%) to 4,979.30. Gold traded mixed in the Asian session, after the precious metal lost some of its value yesterday. Bullion for immediate delivery advanced $2.90 (0.36%) to $ 805.40. Crude oil fell, making a new low, after the dollar posted strong gains. Crude oil for October delivery declined $0.42 (0.39%) to $105.92. Previous Wall Street trade: Judging from today's reaction in global equity markets, the Treasury's implementation of its plan for the GSE's is so far a qualified success. In Europe, stocks rose the most since April with the DJ Stoxx 6 index closing on 281.3 after gaining 9.06 points (3.33%) while in Asia, stocks rallied the most in seven months with the Nikkei rising to 12,624.46, up 412.23 (3.37%). And in a sure sign the Treasury's plan is having its intended effect, Bankrate, a research firm in North Palm Beach, Florida, said that the average U.S. rate for a 30-year fixed mortgage is 6.08% today, down from 6.33% two weeks ago. Keith Shaughnessy, president of Foundation Mortgage, said that "by December, or at least by the start of the so-called spring selling season in April, fixed rates may near 5.5%". Mr. Shaughnessy, who in January 2007 correctly predicted the subprime market collapse, believes "we are at the beginning of a slow and steady decline that will end up with rates half a point lower in three to six months". Previous European trade: European equities continued the strong momentum that was established during the Asian session. The news that the U.S. government will take over the two GSEs sent the market into a buying frenzy. In Europe, the German Dax rose 136.00 points (2.22%) to 6,263.74, while the UK FTSE gained 205.6 points (3.92%) to 5,446.30 Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com