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The U.S. Dollar put in a mixed performance last week against the other major currencies, falling against the Yen and commodity dollars, while rising significantly versus the European currencies that included both the Euro and the Pound Sterling.

The most significant price action was seen last week against the Euro which fell considerably versus the Greenback on renewed stress test skepticism and higher yields at the Portuguese sovereign debt auction. Furthermore, the commodity dollars of the Aussie and Kiwi, and to a lesser extent the Loonie, were the best performers versus the Greenback in last week’s trading, buoyed in part by strong commodity prices.

Overall, the Greenback gained 1.5% against the Euro and was up by 0.7% versus the Pound Sterling. On the downside, the U.S. Dollar fell by -1.1% against the Australian Dollar, -1.0% against the New Zealand Dollar. It declined by a more modest -0.4% versus the Canadian Dollar and -0.2% against the Japanese Yen.

Dollar Performance Mixed Last Week

The largest rise in the Greenback last week against the other majors was seen against the Euro, where the U.S. Dollar gained by -1.5%. Furthermore, the price of gold approaching its all time high also buoyed the Aussie and the Kiwi, as well as the Loonie to a lesser extent.

Although the Greenback actually managed to rise versus the Pound Sterling by +0.7%, the Dollar came off once again against the Japanese Yen where it showed an overall -0.2% drop on the week. This fresh fall came despite BOJ intervention threats and Japanese official talk of fresh measures to weaken the Yen.

Japanese Officials’ Verbal Intervention to Weaken Yen Still Unsuccessful

Markets observers also continued to note fresh attempts by Japanese finance officials to weaken the Japanese Yen after it strengthened once again last week. This sent USDJPY to trade at yet another fifteen year low at the 83.32 level seen last Wednesday.

Specifically, the notable Yen strength prompted additional verbal intervention, this time from Japanese Finance Minister Noda who said that the Japanese would take necessary “decisive steps, which, of course, include intervention”.

In addition, BOJ Governor Shirakawa expressed that the central bank would take extra measures to soften the Yen rise as and when “downside risks materialize and the economy worsens at a faster pace than we expect.”

Euro Weaker on Stress Test Questions and Higher Portuguese Debt Yields

For its part, the Euro was weaker by -1.5% versus the Greenback largely on the back of news out on Tuesday that the influential Wall Street Journal had printed an article regarding the European bank stress tests.

Significantly, the piece noted that the tests had, “understated some lenders’ holdings of potentially risky government debt.” EURUSD fell precipitously on these comments.

Also hurting the Euro’s prospects were the significantly higher yields seen at the Portuguese three and ten year debt auction last week, as well as widening Credit Default Swaps or CDSs for Spain, Portugal and Ireland’s sovereign debt, with Irish CDSs going to record high levels last week.

Forex Market Implications

The forex market took the initiative to sell the U.S. Dollar early last week despite no news out from the United States due to the observance of the Labor Day Bank Holiday by U.S. based traders. Nevertheless, the European currencies failed to gain from this, and they remain a sale based on remaining sovereign debt issues in that region.

In addition, the Yen still presents a good buying opportunity versus the Greenback in spite of USDJPY making a fresh fifteen year low last week. Accordingly, selling USDJPY on a rally would seem to make sense, although traders should watch out for verbal or actual market intervention by the BOJ that could cause a sharp spike to the upside in the rate that would then provide an opportunity to purchase Yen.

Furthermore, the Commodity Dollars may well continue to trade higher, along with commodity prices led by the still bullish price of gold. Also, their issuing countries’ more buoyant economic pictures have generally resulted in higher interest rates and asset yields that continue to attract less risk adverse international investors toward carry trades.

 

Weekly Recap and Outlook for the U.S. Financial Markets and Dollar – 9/13/2010

The U.S. Dollar turned in mixed results against the major currencies last week, rising against the Euro and Sterling, while falling against the Australian and New Zealand dollars and dropping to a lesser extent versus the Canadian Dollar and the Japanese Yen.       Read full report

Weekly Recap and Outlook for EURUSD – 9/13/2010

EURUSD fell significantly in last week’s trading after growing concerns regarding the European sovereign debt situation once again took center stage compounded by fresh questions arising over the recent Eurozone bank stress test results. The week began with EURUSD coming off from its weekly high point of 1.2917 seen in Monday’s session while U.S. traders took the day off for the Labor Day Bank Holiday.   In European economic news, the Eurozone Sentix Investor Confidence survey fell to the 7.6 level that was worse than its expected value of 8.7. In addition, the previous number was revised down to 8.2 from 8.5. Read full report

Weekly Recap and Outlook for GBPUSD – 9/13/2010

GBPUSD fell somewhat last week, starting the week out on a weak note after the release of BRC Retail Sales Monitor on Monday that came out at 1.0%, as was widely anticipated. Furthermore, expectations grew that the BOE may increase the size of its Quantitative Easing or QE liquidity program in the near future. This factor “” in combination with rumors in the forex market to the effect that a major U.K. clearing bank had purchased a billion Euros versus the Pound Sterling due to concerns regarding the U.K. contributing to the European Union’s agricultural budget “” pushed Cable down to hit its weekly low of 1.5293 seen on Tuesday. Also, the U.K. BRC Shop Price Index was released at 1.7% that compared favorably with its previous reading at 1.5%.             Read full report

Weekly Recap and Outlook for AUDUSD – 9/13/2010

AUDUSD gained considerable ground once again last week as risk appetite grew among investors. Also favorable for the Aussie was the decline in political uncertainty surrounding the recent national election that resulted in a hung parliament. Prime Minister Julia Gillard has now asserted leadership over a minority government that she forged as a “Rainbow Alliance” between her Labour Party, the Green Party and various independents. Read full report

Weekly Recap and Outlook for NZDUSD – 9/13/2010

NZDUSD gained significant ground last week as increased risk appetite permeated the forex market. This rally came despite little in the way of significant economic releases coming out from New Zealand, as the Kiwi traded higher mostly in sympathy with its neighboring commodity currency the Aussie. Read full report

Weekly Recap and Outlook for USDJPY –   9/13/2010

USDJPY made yet another fifteen year low in last week’s eventful trading, with the pair initially coming off from its weekly high point of 84.47 that was seen during Monday’s U.S. Labor Day Bank Holiday. Tuesday saw the rate start heading further south in spite of efforts by Japanese finance officials to continue attempting to talk the Yen down. In addition, the BOJ announced that it had decided to keep its benchmark Overnight Call Rate steady at the low 0.1% level as the market was expecting. In its associated statement, the central bank noted that it would, “carefully examine the outlook for economic activity and prices, and, if judged necessary, take policy actions in a timely and appropriate manner.”  Read full report

Weekly Recap and Outlook for USDCAD – 9/13/2010

USDCAD experienced rather volatile trading last week as the commodity currencies generally appreciated amid the renewed risk appetite that affected the forex market. The rate initially started off the week by trading softer during Labor Day Bank Holidays that were observed in both Canada and the United States. The rate dropped despite the absence of economic data releases from either country.                  Read full report

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