Currency Trading Summary – 19 January 07

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Currency Trading Summary – 19 January 07

Found in: Share Trading February 13th, 2007

U.S. Dollar Trading (USD) overall saw strong data with the CPI reaching its highest rates in 8 months at 0.5% higher than the expected 0.4%, whilst the pace of US Housing starts climbed a further 4.5% at 1.642 million. Leading to expectations that the Fed will not have to cut rates anytime soon. The USD strengthened immediately after the release of the data, but lost its gains towards the end of the US session. With Fed Reserve Chairman Bernanke addressing the Senate Budget committee, as the topic of his outlook on interest rates were avoided his remarks left little impact on the market. In other markets, the Dow Jones index dropped 9pts and the NASDAQ fell by 36pts. Technology stocks dropped largely due to Apple computers dropping 5.1pct. In other news, crude oil fell US$1.74 to US$50.50 a barrel. Looking ahead Consumer Sentiment from the University of Michigan data is set to be released later on today

The Euro (EUR) traded higher than expected despite strong US data, trading within a low of 1.2897 and a high of 1.2978, before closing at 1.2958 at the end of the New York Session. With the Bank of Japan keeping rates on hold, the Euro was bought against the Japanese Yen which flowed on to EURUSD.

The Japanese Yen (JPY) with great interest surrounding the release of the BoJ monthly report, following a 6 – 3 vote, it was decided that interest rates will remain unchanged at 0.25% (lowest level in industrialized world). This led to the Japanese Yen trading significantly lower against all other majors in the late Asian session. Governor Fukui said the Bank of Japan judged it practical to wait for more data, given indicators have been mixed. Overall, the JPY traded within a low of 120.48 and a high of 121.60 (highest level seen since March 2003) versus the dollar, before closing at 121.24 in the New York session.

The Sterling (GBP) experienced a fluctuating day trading within a low of 1.9636 and a high of 1.9780, before closing at 1.9732 in the New York session. Due to the Bank of Japan keeping interest rates on hold, GBPJPY reached 240.01, the highest level in over 8 years. Key data regarding retail sales is due to be released on Friday with the market predicting a 0.5% increase, higher than the previous 0.3%.

The Australian Dollar (AUD) reached a 9 year high against the Japanese Yen. The AUD continues to firm trading within a low of 0.7858 and a high of 0.7896, before closing at 0.7886 in the New York session.

Gold (XAU) fell by US$6.40 to US$627.40 an ounce as the US dollar firmed