Forex trading has been light and thin with a bias toward the long side of the U.S. Dollar for most of the morning.
Forex trading has been light and thin with a bias toward the long side of the U.S. Dollar for most of the morning. The lack of fresh economic news may be the reason behind the sideways trade.
There is weakness developing in the EUR USD as traders seem to be backing away from the long side following comments over the week-end by European Central Bank President Trichet that put a damper on Fed Chairman Bernanke’s upbeat comments from Friday.
The GBP USD remains under pressure as traders continue to focus on the floundering U.K. economy. Traders continue to look for more downside pressure because of the Bank of England’s decision earlier in the month to increase the amount of funds available for its asset buyback program.
The early strength in the equity markets is providing a boost to the Canadian Dollar. Firmer oil prices are also having a positive influence on this currency. If downside momentum continues in the USD CAD then look for a test of the recent bottom at 1.0631 over the near-term.
Stronger equity markets and the possibility of a recovery in the U.S. economy are also helping to support the USD JPY. The rally in the stock markets is helping to renew interest in the carry trade.
Increased appetite for risky, higher yielding assets is also contributing to the stronger AUD USD and NZD USD. Traders will continue to support these currency pairs as long as equity markets continue to rally. Late session weakness in the stock markets could trigger a profit-taking break in these currency pairs into the close.