Dollar Trading Mixed Before New York Opening

The U.S. Dollar is trading mixed against most major currencies this morning ahead of the New York session opening. Traders will be taking early cues from the equity markets as earnings continue to dominate the news.

The U.S. Dollar is trading mixed against most major currencies this morning ahead of the New York session opening. Traders will be taking early cues from the equity markets as earnings continue to dominate the news. Later during the trading session, the markets are likely to react to the release of the Fed’s Beige Book.

Lower demand for higher risk commodities and equities is helping to pressure the EUR USD overnight. Traders also seem reluctant to print 1.50 at this time. Comments from earlier in the week from European Central Bank President Trichet and other Euro Zone Finance Ministers is also weighing on the market. Trichet voiced concerns about the rise in the Euro. His main concern was about volatility rather than value. The Euro Zone Finance Ministers are concerned about the detrimental effect a high priced Euro will have on Euro Zone exports.

The GBP USD is sharply higher. Signs that the U.K. economy may be emerging from its recession is helping to boost prices. Traders site rising housing prices, the prospect of higher interest rates and the fact that the Bank of England would leave its debt buying program unchanged as reasons to believe the economy is beginning to improve. The release of the minutes from the last BoE meeting is also providing support as it showed no reasons to believe that the quantitative easing program would be expanded.

Lower equity prices are helping to support the USD JPY this morning. Investors are seeking the safety of the Dollar as protection against a sharp drop in equity prices.

Lower oil and equity prices could pressure the Canadian Dollar today. Yesterday the USD CAD got a boost when the Bank of Canada said “heightened volatility and persistent strength in the Canadian Dollar are working to slow growth and subdue inflation pressures.” Basically this means that the rise in the Canadian Dollar has erased the recent improvements in the economy. The BoC is likely to turn up its threat for an intervention if the Canadian Dollar continues it meteoric rise.

The AUD USD is under pressure this morning. Traders still feel this market may be overbought. Yesterday’s Reserve Bank of Australia’s minutes did not show any evidence the RBA was looking to hike rates 50 basis points in November. This led to a sell-off in the Aussie because speculators had begun to build this scenario into the price.

Positive comments from the Reserve Bank of New Zealand are helping to give the NZD USD a boost this morning. The RBNZ said the rise in the value of the currency will not be an obstacle to raising interest rates. This statement opened the door to a renewal of the recent rally because it meant the RBNZ was considering altering its plan to raise rates after the second quarter in 2010.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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