COMMENTARY

• U.S. Dollar: Curb Your Optimism
  Written by Kathy Lien
  Last updated 1/15/2010 5:05:08 PM ET
  It has been quite a while since we have seen a sea of red in the forex markets, with nearly all of the major currency pairs ending the day in negative territory. The dollar strengthened against everything except for the Japanese Yen which only confirms that risk aversion is driving the flows in the forex market today.
  2 comments
• Forex Markets Hit by Risk Aversion after More Disappointing U.S. Data
  Written by Kathy Lien
  Last updated 1/15/2010 10:24:41 AM ET
  Risk aversion has finally hit the forex markets following another round of weaker U.S. economic data. The dollar sold off against the Yen but rallied against higher yielding currencies as there are only so many disappointments the market can take before the optimism fades.
  8 comments
• Euro Lower, Yen Higher As Risk Aversion Rises
  Written by Boris Schlossberg
  Last updated 1/15/2010 5:28:19 AM ET
  The EUR/USD tumbled nearly 140 points in early morning European trade after rumors regarding the possible resignation of German Chancellor Angela Merkel swept through the currency market. The German government immediately denied the speculation but the pair already weakened by a relatively dovish monetary commentary from ECB chief Jean Claude Trichet tripped a slew of stops before finally stabilizing at the 1.4400 level.
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• Euro Tumbles on Rumors that Merkel May Resign
  Written by Boris Schlossberg
  Last updated 1/15/2010 4:00:38 AM ET
  Euro tumbled through both 1.4500 and 1.4400 levels in early morning European trade on speculation that German Chancellor Angel Merkel was about to resign. The German government immediately denied the rumors, but the pair remained under heavy pressure as fear about political turmoil and uncertainly in Europe’s largest economy swept through the currency market.
  3 comments
• Update: GBP/NZD Long Opportunity at 2.1800
  Written by Bradley Gareiss
  Last updated 1/14/2010 9:34:56 PM ET
  A bullish butterfly pattern has completed on the GBP/NZD and we must update our exits.
  9 comments
• U.S. Dollar: Retail Sales Could Provide Hope
  Written by Kathy Lien
  Last updated 1/14/2010 5:26:01 PM ET
  Given the big surprise in the U.S. retail sales report, we would have expected a more dramatic reaction in the U.S. dollar. The greenback sold off against the most of the major currencies but still managed to end the day higher against the euro and Swiss Franc. Whenever it comes to trading U.S. data, the most logical reaction to the economic report tends to be in USD/JPY and today was no exception. Thirty minutes after the retail sales report was released, USD/JPY fell over 60 pips and by noontime in NY and the London close, the currency pair was down close to 100 pips from its prerelease levels. The reaction in the EUR/USD on the other hand was rather muted considering that ECB President Trichet delivered his press conference minutes after the number. Cautious comments from the central bank head tempered the slide in the dollar and left the EUR/USD basically unchanged on the day. There has been a lot of confusion about how consumer spending could have been so weak when everyone was reporting strong holiday sales. However unless there is a logical explanation that suggests that the drop off in spending was distorted, there should be a lasting impact on the dollar.
  4 comments
• ECB Unlikely to Raise Rates in 2010
  Written by Boris Schlossberg
  Last updated 1/14/2010 9:42:57 AM ET
  ECB chief Jean Claude Trichet gave a generally subdued assessment of growth prospects in the Eurozone suggesting that economic activity in the 16 member union will be uneven and subject to possible downside risks. He even entertained the notion of a negative quarter this but noted that on balance the growth for 2010 a whole is projected to be mildly positive.
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• U.S. Dollar Tanks After Ugly Retail Sales Figures
  Written by Kathy Lien
  Last updated 1/14/2010 8:57:53 AM ET
  The U.S. dollar fell aggressively following the horrid retail sales figures.
  6 comments
• Aussie Shines as Employment Booms
  Written by Boris Schlossberg
  Last updated 1/14/2010 5:27:22 AM ET
  Another data free session in Europe today, but risk FX performed better on the back of strong labor data out of Australia and a rebound in Asian equities ahead of Intel earnings at the end of US trading session. In Australia the employment data once again surprised to the upside printing at 35.2K versus 10K forecast as the unemployment rate dropped to 5.5% from 5.8% the month prior.
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• CAD/JPY Short at 88.96.
  Written by Bradley Gareiss
  Last updated 1/13/2010 9:15:30 PM ET
  A bearish Gartley pattern is forming on the CAD/JPY.
  6 comments
• Will the ECB be Affected by Greece’s Problems?
  Written by Kathy Lien
  Last updated 1/13/2010 5:04:43 PM ET
  On Thursday, the European Central Bank will be delivering their first monetary policy announcement of 2010. In anticipation, the Euro has given up some of its earlier gains in anticipation of the central bank meeting. The ECB is not expected to alter interest rates but the market will be looking for any information on whether the central bank’s stance has changed given the recent fiscal problems of its members nations. Greece’s survivability is a sensitivity issue and any other central banker would probably avoid talking about the topic. However Trichet is not just any central banker and may instead take this opportunity to criticize member countries for not getting their fiscal house in order. Nonetheless, if Trichet even hints that fiscal problems play a role in their decisions on monetary policy, the euro could give up more gains.
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• U.S. Dollar: Retail Sales Could Provide Hope
  Written by Kathy Lien
  Last updated 1/13/2010 4:55:18 PM ET
  After a brief pause, the U.S. dollar continued to weaken and underperformed every major currency except for the Japanese Yen. Despite the lack of economic data and surprises from the Fed’s Beige Book report, the greenback saw quite a bit of action in the first few hours of the U.S. trading session. More specifically, the dollar weakened dramatically against the euro around 6am NY time and then recovered after the stock market opened. This type of price action can be seen in the commodity currencies and only explained by this morning’s correlation between stocks and currencies. Although, U.S. equities eventually went on to hit fresh highs, forcing the dollar to give back some its intraday gains, the magnitude of the recovery in the foreign exchange market paled in comparison.
  20 comments
• New Trade Alert: AUD/USD Poised for Intraday Drop
  Written by Roger Stojsic
  Last updated 1/13/2010 1:15:53 PM ET
  A solid selling opportunity at hand with significant risk/reward potential....
  16 comments
• EUR/USD Climbs to 3 Week Highs as Volatility Sinks
  Written by Kathy Lien
  Last updated 1/13/2010 9:30:10 AM ET
  The euro has climbed to a 3 week high against the U.S. dollar as foreign exchange traders continue to pile on risky assets. There are no top tier U.S. economic reports due for release this morning which suggests that it should be quiet trading ahead of the Beige Book report, barring any wild volatility in the stock market.
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• Can EUR/CHF Go Lower?
  Written by Boris Schlossberg
  Last updated 1/13/2010 5:39:35 AM ET
  Another lackluster night of trade in the currency market as EUR/USD continued to pivot around the 1.4500 figure while most of the price action was centered on the pound which climbed above the 1.6200 figure on the back of hawkish comments by BOE member Andrew Sentance. Mr. Sentance noted that the UK economy is bouncing back from recession and the UK central bank must now take a “wait and see” stance vis a vis monetary policy suggesting that for the time being UK monetary authorities will not engage in any further QE measures. "At some point you have to say we have increased the amount of stimulus enough. It doesn't mean you are going to withdraw it but you don't have to keep adding to it", Mr. Sentance stated.
  19 comments