Forex News and Events:
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The dollar gave in the closing hours of last Friday’s trading day on reports a major U.S bank was in talks with the government for funds to recapitalize. The EURUSD traded from 1.2630 levels to a high of 1.2872 as the U.S banking sector had to be bailed out yet again to secure its financial viability. This new development on Wall Street has seen risk appetite improve momentarily as investors relish the attention the Fed and President Obama are giving to the financial sector.
Secretary of State Hillary Clinton has urged Chinese officials to continue buying U.S treasury securities stating it was a matter of mutual interest, saying “our economies are so intertwined” and that “it would not be in China’s interest” if the U.S were unable to finance deficit spending to stimulate its stalled economy.
The Yen continues to shed its haven status as further worries on the Nippon economy drive the Yen’s slump. Furthermore, incessant political jousting and inconsistencies have stifled any chance of a quick and comprehensive reaction. It seems that the bulk of Japanese repatriation flows for the March financial year-end completed and the deleveraging process that has been driving the Yen’s strength lately is in constant decline. The nexus between the Japanese equity and currency markets have broken down. This has seen the Yen give way to the Dollar and the Euro.
Gold traded as high as $1’006.42/oz on Friday, a level not seen in a year. The all time high of $1’033/oz remains the short term target. An interesting relationship between the 1month USDJPY and XAUUSD charts show the vast transfer of funds into Gold on the part of Japanese firms in a bid to anchor their investments in the historical safe-haven commodity.
USDCHF saw the Swissy rise sharply in the final hours of Friday trading as the dollar’s decline benefitted other currencies. The near 4-figure advance of the Swiss franc against the U.S Dollar comes as a surprise amidst the US – UBS banking secrecy debacle. The return of risk appetite seems to be benefitting the historically stable currencies such as the Swiss Franc and Sterling – rising 5 figures since Friday.
