Protectionism Sinks Asian Markets

Daily Forex Fundamentals | Written by AC-Markets | Sep 14 09 08:56 GMT |

Market Brief The Greenback fell to 2009 fresh lows against most major currencies last week, with Dollar Index used to track the greenback against 6 major currencies dropped 2% to 76.608 from 78.136 a week earlier. Demand for the safe-haven currency dropped sharply last week as Standard & Poor's 500 Index posted its biggest weekly gain for the year, and gold continued its uptrend to top at 1011.95 on Friday. Other important factors put pressure on the safe-haven currency. The three months LIBOR for dollars dropped to a record low on Wednesday, making the greenback the cheapest currency to fund purchases of higher yielding assets, and UN called for dollar reserve role to be eliminated. Should the USD fall further this week? I believe we need to watch closely the stock indices as it's relation with the USD are still inversely proportional, while key events such as retail sales, consumer prices and TICS could be the market movers for this week. The EUR appreciated 2% against the USD last week, but was almost unchanged on Friday, closing at 1.4570 after posting a new 2009 high at 1.4635 earlier in the day. The GBP rallied after the BoE left rates at 0.5%, and quantitative easing stance unchanged at £175 B. The JPY possibly benefited from funds flowing back to safer assets towards the end week, as we've seen correction in U.S. stock markets and drop in commodities except the precious metals. Commodity currencies such as AUD and CAD also fell on Friday as commodity prices dropped. Gold for the first time since February closes above $1,000 benchmark. The yellow metal rallied to as high as 1013.7 on Friday before closing at 1006.4. I do favorite some more upside in gold for a test of 1033.9 levels. Crude Oil dropped to a low of $68.8 after topping at $72.9. OPEC announced to keep production quotas unchanged on Wednesday. Obviously members are satisfied with the current price level and suggest 68-73 levels to continue for some time. This week there would be couple of important data releases, especially from the US and UK, along with 2 central banks meetings 'BoJ & SNB'. US data could show more signs of economic recovery with focus on retails sales, CPI, TIC capital flow, and housing market. While UK will be releasing its CPI, which is expected to remain far below BoE's target at 2%, UK jobs report and retails sales would be even released. From the Eurozone focus will be on German ZEW, CPI, and trade balance 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.