U.S. Dollar Gaining Strength against Most Majors

The U.S. Dollar is gaining strength against most major currencies at the midsession with the exception of the Pacific Rim countries.

The U.S. Dollar is gaining strength against most major currencies at the midsession with the exception of the Pacific Rim countries.

Stronger global equity markets contributed to the earlier weakness in the Dollar as traders once again increased demand for more risky assets after reassessing U.S. economic data and the odds of an interest rate increase by the Federal Reserve. The inability to rally the stock market after an early morning surge helped the Dollar turn positive.

The NZD USD is posting a strong gain fueled by the prospect of higher interest rates. In adapting a more hawkish tone since the last meeting in November, the Reserve Bank of New Zealand said that if the economy continued to improve, conditions may support the removal of monetary stimulus “around the middle of 2010.

The AUD USD is holding on to gains following the release of a better than expected employment report. Overnight the Australian government reported that the unemployment rate fell to a seasonally-adjusted 5.7%.

The USD CHF is trading sideways-to-lower overnight following the Swiss National Bank monetary policy decision. The SNB left its 3-month target rate unchanged while announcing plans to stop bond purchases.

Stronger equity markets and a bearish economic report are helping pressure the Japanese Yen The drop in core machinery orders in October is fueling speculation that deflation will undermine the economic recovery.

The EUR USD has erased all of its earlier gains after traders became more risk averse due to the lack of follow-through to the upside in the stock market. The Euro is clearly taking its direction from the stock market. Today’s action is taking place on light volume.

The GBP USD moved lower shortly before the mid-session as demand for higher yielding currencies stalled. This morning the Bank of England left interest rates unchanged while voting to maintain its asset-purchase program.

The USD CAD is down slightly but remains rangebound between a pair of 50% levels at 1.0598 to 1.0537. A weaker stock market late in the trading session could help the U.S. Dollar gain on its Canadian counterpart.

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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