Dollar Strengh Continues To Dominate Majors Ahead Of ECB Monetary Policy Meeting

Daily Forex Fundamentals | Written by AC-Markets | Jan 15 09 01:18 GMT |

Market Brief The Usd held strong against major currency pairs ahead of the ECB rate decision scheduled to be announced tomorrow. The EurUsd ended flat trading near yesterday's close of 1.31, while the UsdJpy was slightly lower at the high range of 88. The GbpUsd gained a bit over 100 pips to the low 1.46 level, and was the most active among the major currencies. Equity markets dropped substantially in the US and Europe with the Dow off as much as 248pts or 2.94%, and the FTSE lower by 218pts or 4.97%. Bond yields dropped further on increased buying at the earlier portion of the curve, 2yr fell to .70%. Commodities also dropped which was consistent with the trend of dollar strength and waning risk appetite. Oil fell 1.32% to $37bbl and gold also declined to $811oz which is in tandem with the overall trend of risk aversion. The ECB is faced with a critical decision tomorrow which will have significant impact on Euro. FX Traders have already priced in a 50bps cut, but with the recent turn of events with S&P placing Spain and Portugal's long term debt on credit watch and downgrading Greek sovereign debt, a deeper cut is necessary. Actual price action was sideways not seeing any serious momentum in either direction, but his typical ahead of any major monetary policy action. The global economic story continues to deteriorate placing increased pressure for aggressive govt. action through fiscal and monetary policy tools. Investors maintain a bearish stance on risk, and dollar strength should be resilient in this environment. ACM FOREX Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.