FX Market Update
The dollar posted its biggest weekly gain versus the euro since October after breaching $1.43 for the first time in three months, forcing traders to abandon bearish bets on the greenback.
The Swiss franc advanced versus the euro as the Swiss National Bank refrained from selling the currency, pushing it beyond 1.50 for the first time since a rally in March that led to an intervention. The euro was little changed against the dollar as the European Central Bank raised its estimate for writedowns in nations using the single currency by 13 percent.
The U.S. currency rallied 2 percent this week against the euro after the Federal Reserve said at the end of its two-day meeting on Dec. 16 that U.S. economic conditions had improved.
The euro dropped 0.6 percent today to 1.4937 francs, from 1.5020, as Swiss policy makers avoided intervening. The dollar fell 0.4 percent to 1.0433 francs.
The central bank changed its language on currency purchases at last week’s quarterly monetary-policy assessment, saying it will act to counter “any excessive” moves in the franc against the euro. At its September assessment, the bank said it would “continue to act decisively” to prevent “any” appreciation.
The franc tumbled 3.3 percent against the euro on March 12, the largest drop since the common currency debuted in 1999, when the Swiss National Bank intervened to prevent a strengthening currency from undermining the economy.
Switzerland’s economy returned to growth in the third quarter after a year-long contraction, led by a surge in company spending and a revival in exports. Central banks intervene by buying or selling currencies to influence exchange rates.
The franc also strengthened today on reduced demand for higher-yielding assets as Iraq’s National Security Council said Iran had violated Iraq’s border and “territorial integrity” and called on Iran to withdraw its forces from the region and lower its flag.
Iranian forces entered Iraqi territory at dawn yesterday and occupied well number 4 in the East Maysan field in the al- Fakah region, 450 kilometers (280 miles) south of Baghdad, Border Guard General Zafer Nazmi said.
The yen fell today against the dollar and euro after the Bank of Japan said it won’t tolerate consumer price declines, spurring speculation the central bank will maintain a target lending rate of almost zero.
BOJ Governor Masaaki Shirakawa and his colleagues refrained from announcing more policy actions, choosing instead to watch the effect of a 10 trillion yen ($111 billion) lending program adopted two weeks ago after the government urged them to do more to fight deflation. The bank kept the target lending rate at 0.1 percent, as forecast by all 19 economists in a Bloomberg survey.
The euro weakened versus the dollar as the ECB said the region’s banks may have to write down an additional 187 billion euros ($268 billion) as loans to property companies and eastern European nations threaten the financial recovery.
Deterioration in the labor market is “abating,” and household spending is increasing, the Fed said in its statement this week. Policy makers held the target rate for overnight lending between banks at zero to 0.25 percent.
Indices | Closing | Net Change | % Change |
DOW | 10328.89 | +20.63 | +0.20% |
S & P | 1102.47 | +6.39 | +0.58% |
NASDAQ | 2211.69 | +31.64 | +1.45% |
Currencies (NY) | High | Low | Last |
EUR | 1.4359 | 1.4262 | 1.4338 |
GBP | 1.6196 | 1.6053 | 1.6161 |
JPY | 90.91 | 90.28 | 91.49 |
CHF | 1.0479 | 1.0414 | 1.0427 |
AUD | 0.8917 | 0.8841 | 0.8902 |
Main Economic Data for 21 Dec 2009 | Exp | Last | ||
0750 | JPY | Merchandise Trade Balance Total (Yen) (NOV) | 300.0B | 807.1B |
0750 | JPY | Adjusted Merchandise Trade Balance (Yen) (NOV) | 268.0B | 419.1B |
0750 | JPY | Merchandise Trade Exports (YoY) (NOV) | -6.8 | -23.2 |
0750 | JPY | Merchandise Trade Imports (YoY) (NOV) | -17.9 | -35.6 |
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0930 | AUD | New Motor Vehicle Sales (MoM) (NOV) |
| 3.7% |
0930 | AUD | New Motor Vehicle Sales (YoY) (NOV) |
| 3.3% |
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1000 | NZD | Credit Card Spending s.a. (MoM) (NOV) |
| 0.2% |
1000 | NZD | Credit Card Spending (YoY) (NOV) |
| -0.4% |
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1230 | JPY | All Industry Activity Index (MoM) (OCT) | 1.0% | -0.6% |
1300 | JPY | Bank of Japan Monthly Report |
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1500 | JPY | Convenience Store Sales (YoY) (NOV) |
| -5.5% |
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1600 | CHF | Money Supply M3 (YoY) (NOV) |
| 7.7% |
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2130 | CAD | Retail Sales (MoM) (OCT) | 0.8% | 1.0% |
2130 | CAD | Retail Sales Less Autos (MoM) (OCT) | 0.5% | 1.1% |
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