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Fundamental Overview – Market Movers Last Week –

The U.S. Dollar continued sliding against all the major currencies last week, extending the previous two weeks’ substantial losses even further.

The U.S. Dollar Index lost -0.76 points last week to close at 77.33, showing a net loss of -0.98 percent on the week. The Dollar Index is now showing a net loss of 0.53 points or 0.69 percent for the year to date.

The Japanese Yen was the best overall performer against the Greenback, rising 1.5 percent last week. The Yen was closely followed by the commodity currencies, with the New Zealand Dollar rising by 1.4% and the Australian Dollar gaining 1.3% versus the U.S. Dollar.

In addition, the Euro gained +1.1% against the Greenback, while the Canadian Dollar strengthened by +0.9%.   The Pound Sterling continued underperforming the other major non-Greenback currencies by only gaining a relatively modest +0.8% against the U.S. Dollar on the week.

U.S. Dollar Declines Further After Disappointing Employment Numbers


The U.S. Dollar’s continued decline last week was in part due to the ADP Non Farm Employment Change number which disappointed the market with a decline of -39K versus an expected rise of +23K on Wednesday.

This was compounded by the weak Non Farm Payrolls number out on Friday which showed a contraction of -95K jobs, versus an expected increase of 1K. Nevertheless, the U.S. Unemployment Rate managed to drop a notch to 9.6 percent versus an expected 9.7 percent.

As the Greenback falls, the prices of certain key commodities have risen notably. Among these is the price of gold which made a new all time high on Thursday by trading to $1,364.78 per ounce. The price of crude oil also gained 1.32% on the week.

Putting additional pressure on the U.S. Dollar last week were comments by Ben Bernanke warning of the pressing need to rein in the U.S. budget deficit and the dire condition of the United States economy.

In referring to the need to cut government spending the wake of recent seemingly excessive spending in an attempt to stimulate the flagging U.S. economy, Mr. Bernanke stated that,


“The only real question is whether these adjustments will take place through a careful and deliberative process… or whether the needed fiscal adjustments will be a rapid and painful response to a looming or actual fiscal crisis.”

Despite some positive news on the housing front, economic data for the United States continues to show that the U.S. economy is weakening. This just gives the Fed even more of a reason to flood the economy with fresh dollars that may eventually ignite the fires of inflationary pressures.

The Yen Makes New All Time Highs Against the Greenback


The Greenback was especially weak against the Japanese Yen last week, after Japanese finance officials made comments indicating that the BOJ was merely smoothing the Yen’s rise with its recent intervention efforts.

The Yen continued to strengthen despite last week’s additional easing moves by the Bank of Japan which lowered rates “” yes, even lower than 0.10% “” to a range between 0% and 0.10%. Also, the central bank announced a 5 trillion Yen program to buy Yen denominated debts to reduce investment yields in an attempt to further support the rather soft Japanese economy.

Furthermore, BOJ Governor Shirakawa, in a statement made last week said that:

“Each country is making the best decision by looking at its economy and financial markets. I don’t think there is competition to ease monetary policy.”

Shirakawa also added that,

“The yen is rising because of uncertainties in the global economy, especially the U.S.”
These comments gave currency traders an additional impetus to sell USDJPY even further, eventually sending it to yet another all time low of 81.72 last Friday.


Australian Dollar Makes New Post Float High


The Australian Dollar made a new post-float high against the Greenback last week, trading up to 0.9917 last Thursday as the price of gold made new all time highs.

The Aussie sold off sharply against the Dollar early in the week due to the RBA surprising the market by leaving its benchmark Official Cash Rate at 4.5%.

Nevertheless, the Aussie came back strongly later in the week after the Australian Employment Change showed that the Australian economy had added +49.5K new jobs, versus an expected gain of only +20.2K.

Once U.S. employment data came out weak, the combination of factors took the Aussie back up to make a new recent high at 0.9917 on Thursday.

The Australian Dollar was allowed to float against the other major currencies in December of 1983, and it has never traded as high versus the Greenback since that time roughly 27 years ago.

Nevertheless, it seems that the all time high in the Australian Dollar apparently happened in December of 1973 when the Australian Dollar hit the heady level of 1.4900 to the U.S. Dollar.

Forex Market Implications

Basically, the formerly almighty U.S. Dollar has continued to show persistent signs of weakness across the board. Nevertheless, a certain degree of retracement would probably help make the Greenback’s decline seem a bit healthier.

Also, with rising commodity prices “” which include a new all time high in the price of gold “” combined with the growing certainty in the market that the increasingly dovish Fed will soon begin a new round of economic stimulus programs, the case for hyper-inflation in the United States seems to be gaining ground.

Accordingly, although buying the Greenback on a short term basis might be a good trade for some corrective price action, beware of a turnaround to the downside and get ready to go short Dollars.

Furthermore, due to the current rally in key commodities like gold and oil, the Aussie, Kiwi and Loonie continue to be favored over the currencies of commodity importers like the Greenback, Euro and Sterling.

Weekly Recap and Outlook for the U.S. Financial Markets and Dollar – 10/11/2010 The U.S. Dollar continued losing ground against all of the other major currencies for the third straight week during last week’s trading, as gold and the Japanese Yen both made new all time highs.          Read full report

Weekly Recap and Outlook for EURUSD – 10/11/2010 EURUSD furthered its ongoing rally in last week’s trading, extending the preceding week’s gains by even managing to penetrate above the key 1.4000 psychological level. The week started off with EURUSD trading significantly softer in the wake of the Irish Central Bank reducing its economic growth forecasts for Ireland down to 0.2% from 0.8% in 2010, and down to 2.4% from 2.8% in 2011. Scheduled economic data releases out on Monday showed that the PPI in the Eurozone has risen by just +0.1% for the month compared with an anticipated rise of +0.2%. In terms of U.S. data, Pending Home Sales gained +4.3% that was a substantial improvement over the +2.8% consensus. Nevertheless, the former number was downwardly revised by a smaller amount from +5.2% to +4.5%. In addition, U.S. Factory Orders fell by -0.5% for the month compared with the lower drop of -0.3% anticipated by the market; however, the former number was revised upward to +0.5% from the +0.1% level that resulted in an overall positive impact. Read full report

Weekly Recap and Outlook for GBPUSD – 10/11/2010 GBPUSD gained some ground last week after showing only a minor rise the previous week as the U.S. Dollar softened across the board against all of the other major currencies. Cable started the week out on a weak tone by gapping lower at the open to make its weekly low at the 1.5748 level on Monday. This gap was nevertheless soon filled as the pair then reversed to the upside in the wake of the release of U.K. Construction PMI that came out at 53.8 “” significantly higher than the 51.6 anticipated and an improvement over the previous 52.1 reading. Read full report

Weekly Recap and Outlook for AUDUSD – 10/11/2010 AUDUSD firmed again last week to make fresh highs seen since its exchange rate was floated on December 8th of 1983. This move has increased the likelihood of the rate trading up to touch the key psychological parity level in the immediate future. The pair started last week off by trading weaker on Monday as Australian markets were closed in observance of the Labour Day Bank Holiday. Read full report

Weekly Recap and Outlook for NZDUSD – 10/11/2010 NZDUSD continued to rise during last week’s trading as the Greenback dropped further versus all of the other major currencies, the Aussie traded to post-float highs and the price of gold made fresh all time highs. Read full report

Weekly Recap and Outlook for USDJPY –   10/11/2010 USDJPY persisted in falling to fresh lows yet again last week as the U.S. Dollar weakened even further in the face of consistent strength seen in the Japanese Yen. The pair began last week with a positive tone by gapping up at the Monday open of 83.24 in spite of news that Japanese Average Cash Earnings only showed a flat reading for the year. This was considerably lower than the +0.8% number the market had anticipated. Read full report

Weekly Recap and Outlook for USDCAD – 10/11/2010 USDCAD continued to slide last week as the Greenback posted additional losses versus all of the other major currencies. The rate started the week off with a strong tone on Monday, buoyed by positive U.S. Pending Home Sales numbers that gave initial support to the U.S. Dollar. Although Tuesday then saw the rate make its weekly high print at the 1.0272 level in the absence of any major economic releases out of Canada, but the pair then reversed and fell considerably. Read full report

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.