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19 Oct 2013
Weekly Recap: Veni, vidi, vici in Euro... no hopes in USD
FXstreet.com (San Francisco) - And the Forex market came out again from its latest apocalyptic chaos: after 16 days, midnight Wednesday local time the US government ended the shut down and extended its debt ceiling. The bill passed 285-144, and despite averting the threat of a federal debt default for the moment, it is ultimately only a temporary measure: the ceiling has been extended up to February next year, and a committee was formed to deal with the budget issues and should submit its recommendations no longer than December 13th.
The whole situation has been nothing but extremely negative for the greenback: in Greg Gibbs, FX strategist at RBS words, “the next few months could be the weakest period for the USD since its fall in the 2010/11, QE2.” The confidence investors may had in US slow growth has now been disrupted, and the country will need much more than some positive NFP readings to regain it. The September report, that gauges the health of the employment situation, has been rescheduled for upcoming Tuesday, while October one will be released on November 8th. However, the effect it could have in the market diminished after these latest events, as QE tapering is for now filed.
More damage has been made by outflows, as based money market fund assets recorded their largest one-week decline since August 2011 as investors pulled $43 billion out of the US, while gold was up more than 3% for the week, in a clear run to safety.
And above it all, a Chinese before unknown rating agency called Dagong, cut US sovereign debt rating to A- from A on Thursday. All in one, the USD closes the week trading near its yearly lows against its European rivals also negative against other majors, while US yields dropped sharply over the last few days. Stocks on the other hand, soared on the back of guaranteed easy money for the months to come, with S&P reaching this Friday a new all time high.
The EUR/USD extended gains on Friday with the pair testing the 1.3700 level and closing at 1.3680. The Euro closed its fourth positive week in the last six. It seems the 1.3710 is a matter of time. According to the FXstreet.com chief analyst Valeria Bednarik, "bulls remain in charge." Bednarik commented in a recent report that "the overall picture has turned pretty bullish for the pair, with suspected stops for sellers above mentioned 1.3710 high: a price acceleration beyond it should lead to a stronger advance, eyeing then 1.3830/50 price zone for next week."
The GBP/USD closed Friday with limited gains as the pair traded briefly above the 1.6200 and retraced to close the day at 1.6165, just above opening price. The USD/JPY extended declines bellow the 98.00 level with the pair pricing at 1-week lows around 97.55. However the Dollar to Yen rate remains inside the last 3 months range in between 0.9590 and 101.00.
Maind headlines in the American session:
Canadian CPI rises 0.2% in September, up 1.1% on year
Bloomberg survey shows taper not expected until March
Wall Street wins fueled by co. earnings; data validity rumors spread among QE specs
Fed's Evans: Not enough positive information to taper this month
The whole situation has been nothing but extremely negative for the greenback: in Greg Gibbs, FX strategist at RBS words, “the next few months could be the weakest period for the USD since its fall in the 2010/11, QE2.” The confidence investors may had in US slow growth has now been disrupted, and the country will need much more than some positive NFP readings to regain it. The September report, that gauges the health of the employment situation, has been rescheduled for upcoming Tuesday, while October one will be released on November 8th. However, the effect it could have in the market diminished after these latest events, as QE tapering is for now filed.
More damage has been made by outflows, as based money market fund assets recorded their largest one-week decline since August 2011 as investors pulled $43 billion out of the US, while gold was up more than 3% for the week, in a clear run to safety.
And above it all, a Chinese before unknown rating agency called Dagong, cut US sovereign debt rating to A- from A on Thursday. All in one, the USD closes the week trading near its yearly lows against its European rivals also negative against other majors, while US yields dropped sharply over the last few days. Stocks on the other hand, soared on the back of guaranteed easy money for the months to come, with S&P reaching this Friday a new all time high.
The EUR/USD extended gains on Friday with the pair testing the 1.3700 level and closing at 1.3680. The Euro closed its fourth positive week in the last six. It seems the 1.3710 is a matter of time. According to the FXstreet.com chief analyst Valeria Bednarik, "bulls remain in charge." Bednarik commented in a recent report that "the overall picture has turned pretty bullish for the pair, with suspected stops for sellers above mentioned 1.3710 high: a price acceleration beyond it should lead to a stronger advance, eyeing then 1.3830/50 price zone for next week."
The GBP/USD closed Friday with limited gains as the pair traded briefly above the 1.6200 and retraced to close the day at 1.6165, just above opening price. The USD/JPY extended declines bellow the 98.00 level with the pair pricing at 1-week lows around 97.55. However the Dollar to Yen rate remains inside the last 3 months range in between 0.9590 and 101.00.
Maind headlines in the American session:
Canadian CPI rises 0.2% in September, up 1.1% on year
Bloomberg survey shows taper not expected until March
Wall Street wins fueled by co. earnings; data validity rumors spread among QE specs
Fed's Evans: Not enough positive information to taper this month