COMMENTARY

• Good Time To Be A Dollar Bull
  Written by Kathy Lien
  Last updated 1/29/2010 5:12:42 PM ET
  It’s a good time to be a dollar bull because over the past two months, the dollar has strengthened dramatically against all of the major currencies. In fact, none of the G10 currencies managed to outperform the dollar since the beginning of December. The currency that weakened the most against the greenback is the euro, which has fallen more than 8 percent. Surprisingly enough, the currency that has been the most resilient in the face of persistent dollar strength has been the Canadian dollar. This morning’s strong GDP, Chicago PMI and Consumer Sentiment numbers helped to drive the dollar even higher with the dollar index hitting a 6 month. Currency pairs such as the EUR/USD fell to the lowest level since July 2009. Both good and bad news have been supportive of the dollar which most likely means that the trend will continue until traders have a good reason to stop buying dollars. The EUR/USD has broken a very key support level and a move below 1.38 is now possible.
  2 comments
• Dollar Soars as U.S. GDP Blows Away Expectations
  Written by Kathy Lien
  Last updated 1/29/2010 8:53:15 AM ET
  The U.S. economy grew by 5.7 percent in the fourth quarter, blowing away market expectations and sending the dollar sharply higher against the Japanese Yen.
  3 comments
• Dollar Strength Depends on US GDP
  Written by Boris Schlossberg
  Last updated 1/29/2010 5:09:30 AM ET
  Risk FX made a round turn in early European trade after selling pressures in Asia sent EUR/USD to a fresh six month low. EUR/USD tumbled to 1.3912 in morning Tokyo dealing after Nikkei dropped more than -2% on weakness in the exporter sector, but the pair staged a recovery in Europe after EU Monetary Affairs Commissioner Joaquin Almunia calmed fears regarding the fiscal problems of Greece.
  15 comments
• Japanese Data Provides No Clear Direction for the Yen
  Written by Boris Schlossberg
  Last updated 1/29/2010 3:23:21 AM ET
  Japan produced a set of mixed economic data on the last trading nigh of the week showing that the world’s third ;largest economy continues to recover from the worst contraction in the post war era albeit an uneven pace. Japanese labor markets improved with the unemployment rate declining to 5.1% versus 5.3% eyed – recording their best reading since November of last year. Japanese labor conditions have improved consistently since August of last year when the unemployment rate hit a peak of 5.7%.
  2 comments
• Update: EUR/GBP Forming Opportunity to Go Long at 0.8614
  Written by Bradley Gareiss
  Last updated 1/28/2010 6:58:45 PM ET
  Our EUR/GBP trade has completed and reached our first profit target. We have updated our stop and our second profit target.
  2 comments
• U.S. Dollar: Will Growth Live Up To Expectations?
  Written by Kathy Lien
  Last updated 1/28/2010 5:09:29 PM ET
  The U.S. dollar extended its gains as risk aversion continues to hang over the markets. The EUR/USD spent most of the North American trading session below the 1.40 level which reflects the overall weakness in the currency pair. Since U.S. equities have sold off and bond yields have fallen, it is clear that the rally in the dollar today is a reflection of fear and not optimism. Yet on a percentage basis, the rally in the dollar has been modest and further gains in the greenback will now be contingent upon Friday’s GDP report. This morning’s U.S. economic data failed to reinforce the credibility of the Federal Reserve. Durable goods orders fell short of expectations while any improvement in jobless claims is met with skepticism. Ben Bernanke was confirmed by the U.S. Senate for the second term so the uncertainty surrounding his nomination will now evaporate.
  3 comments
• Dollar Hit by Smaller Rise in Orders for Durable Goods
  Written by Kathy Lien
  Last updated 1/28/2010 9:09:12 AM ET
  Another round of disappointing U.S. economic data has pushed the dollar sharply lower against the Japanese Yen and many of the other major currencies. Despite the Fed's optimism, if economic data does not improve, the central bank's credibility will come into question. The euro has not benefited from the sell-off in the dollar as concerns about Greece continue to weigh on the single currency. Last night, China suggested that they may not be interested in buying Greek debt, eliminating one of its the biggest potential investors.
  18 comments
• Euro Recovers After Hitting Six Month Lows
  Written by Boris Schlossberg
  Last updated 1/28/2010 5:17:29 AM ET
  After a final flurry of risk aversion flows in early Asia trade that saw EUR/USD plummet to a six month low of 1.3930, risk currencies rebounded in the wake of a positively received State of the Union speech by President Obama that focused primarily on economic issues. President Obama stressed the need for Congress to pass the jobs bill, offered small businesses tax incentives to hire employees and promised to extend middle class tax cuts.
  19 comments
• Obama's SOTU Address Spurs Rebound in Risk
  Written by Boris Schlossberg
  Last updated 1/28/2010 2:37:05 AM ET
  The EUR/USD dropped below the psychologically key 1.4000 figure in early Asian trade today hitting its lowest point in more than six months as it tripped stops all the way to 1.3930. The pair however managed to recover most of its losses in the wake of President Obama’s speech which proved friendly to risk assets. Risk FX staged a strong recovery with Aussie, cable and kiwi all following suit to the upside after President Obama focused on economic themes promising to extend middle class tax cuts, provide tax incentives for small business and urged Congress to finish work on the jobs bill “without delay”.
  2 comments
• EUR/GBP Forming Opportunity to Go Long at 0.8614
  Written by Bradley Gareiss
  Last updated 1/27/2010 7:49:24 PM ET
  A bullish butterfly is forming on the EUR/GBP.
  22 comments
• Will Dollar Extend Gains Post FOMC?
  Written by Kathy Lien
  Last updated 1/27/2010 4:56:52 PM ET
  The U.S. dollar climbed to a six month high against the euro following the Federal Reserve’s monetary policy announcement. Dollar bulls have reacted very positively to the Federal Reserve’s optimistic tone. Going into the meeting, everyone had feared that the Fed would grow more pessimistic in reaction to the latest economic reports but instead of doing so or opting to leave the statement unchanged, they decided to let the market know that they believe “economic activity has continued to strengthen.” As a result, the dollar ended the day higher against nearly every major currency. With the EUR/USD flirting with the 1.40 level, traders are now wondering whether the dollar will continue to rise. In the short term, we think this is very possible considering that the dollar has either broken or is at the cusp of breaking important resistance levels. Investors will also be inclined to “believe” the Fed but if economic data remains weak, the central bank’s credibility will come into question.
  3 comments
• Dollar Soars as Fed Ignores Recent Disappointments in U.S. Data
  Written by Kathy Lien
  Last updated 1/27/2010 3:08:55 PM ET
  Between Apple's introduction of the iPad, and the Federal Reserve's Monetary Policy announcement, investors have a lot to focus on this afternoon. However the Fed managed to steal the limelight from Apple who was in the process of introducing its latest creation when the central bank released their monetary policy statement. To the surprise of foreign exchange traders, the dollar skyrocketed as the Fed completely ignored the recent deterioration in the labor market and the decline in consumer spending. Instead, the tone of FOMC statement was more upbeat than their tone back in December with the central bank saying that “economic activity has continued to strengthen.” Adding to the bullishness of the statement was Fed President Hoenig’s dissenting vote.
  6 comments
• How to Trade the FOMC Meeting
  Written by Kathy Lien
  Last updated 1/27/2010 9:07:55 AM ET
  It is that time of the month again when the Federal Reserve sits down and discusses what they want to do with U.S. monetary policy. Their decision will impact the financing costs for everyone from corporations to the average American.
  4 comments
• Euro Holds Support at 1.4000
  Written by Boris Schlossberg
  Last updated 1/27/2010 4:42:35 AM ET
  With equities hitting their lowest levels in more than a month risk FX has been under pressure all night long, but due to the barren eco calendar the ranges have been relatively tight and so far high beta currencies have managed to hold on to key support levels as markets turn their attention to the FOMC meeting at 19:15 GMT later today.
  1 comment
• Could RBA Hold Off on Rate Hikes?
  Written by Boris Schlossberg
  Last updated 1/27/2010 12:52:36 AM ET
  Australian CPI printed broadly in line with expectations. Trimmed mean CPI came in at 0.6% as projected while the q/q numbers were a bit hotter at 0.5% vs. 0.4% eyed. The largest drivers of increase in prices were housing, food and beverages and holiday costs.
  18 comments