Forex Market Technical and Fundamental Recap
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Today's Forex Analysis summary.
The Euro surged to the upside this week as better than expected U.S. economic data helped shift trader sentiment away from the safe haven U.S. Dollar to the more risk driven Euro.
This week’s strong equity markets signaled a demand for higher risk assets and helped drive the GBP USD sharply higher. The appreciation in the Pound encouraged traders to forget about the widening U.K. deficit and contracting economy
The USD CAD rallied to a 6-week high fueled by a much higher stock market and a break out to the upside in crude oil. Speculators are buying crude oil on expectations that a global economic recovery will drive up demand for this key Canadian export.
Signs of a recovery in the U.S. economy led traders to buy the U.S. Dollar and sell the Japanese Yen as traders attempted to capture the slightly better yield. Globally, the rise in equity markets led to a revival in the carry trade. This is a strategy where investors sell the lower yielding currency to invest in higher yielding assets.
More signs of an economic recovery in the U.S. including better than expected bank stress test results and signs that the rate of U.S. job losses was shrinking encouraged Swiss Franc traders to repatriate their U.S. investments back to Switzerland. This was another sign that the U.S. Dollar is losing its safe haven status.
The Australian Dollar closed on its weekly high while closing in a position to test a major 50% price at .7928. News that the Reserve Bank of Australia had decided to refrain from cutting its benchmark interest rate fueled the start of this week’s rally while bullish investors remained optimistic that an economic recovery in China would lead to greater demand for Australian exports
The surprise this week was the strong rise in the New Zealand Dollar. This currency rallied as traders chased the higher yielding Kiwi on speculation the global economy was on the mend. News that China was on the road to recovery is leading traders to speculate the New Zealand economy would soon mount a recovery because of improvements in the demand for exports.
By ForexHound.com the portal for Analysis, Education and exclusive timely market Gann Analysis
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