Daily Forex Report – USD lower, housing starts fall 10.6% and stocks slide

Wednesday, November 18th, 2009 at 12:10 pm

Forex Trading Daily Forex Report – USD lower, housing starts fall 10.6% and stocks slide Lowest Spreads

Forex Daily Forex Report USD lower, housing starts fall 10.6% and stocks slide

USD: Mixed, housing starts and building permits drop sharply, CPI rises JPY: Lower, JAL may be on the verge of bankruptcy, monitoring the debate over the Yuan EUR: Higher, current account slipped to deficit, construction output falls, gains in cross to GBP GBP: Lower, MPC split on quantitative ease, discussed possible cut in the remuneration rate CAD and AUD: AUD lower & CAD higher, Australia’s leading indicators rise, Canada’s CPI turns higher Overview After a two-day rally the USD was back on the defensive Wednesday pressured by the return of risk appetite as equity markets rally in Europe and gold trades at a new record high. A statement from Fed Chairman Bernanke that US interest rates would remain low for extended period and maybe longer if unemployment continues to rise appears to be the latest catalyst for the USD selloff. The fact that the Fed is not prepared to withdraw stimulus at this time fuels demand for commodities and contributes to improving risk sentiment. AUD traded higher supported by RBA rate hike speculation and report of a sharp rise in Australia’s Westpac leading index for September. CAD traded higher supported by report of the first rise in Canadian CPI in for five months and by higher commodity prices. European currencies were mixed with GBP gains limited by report that the BOE policy board is split ways on quantitative ease with some members calling for expansion of quantitative ease and others warning of the risks of further expansion of asset purchases. Demand for EUR/GBP cross supported the EUR with EUR gaining despite report of a sharp widening of the EU current account deficit and drop in construction output. US economic data was mixed with CPI rising more than expected and housing starts posting a sharp decline. The CPI rise reflects higher energy and auto prices. USD erased some of its early losses after the release of disappointing US housing data and stocks turned lower. USD upside was limited as today’s data will likely encourage the Fed to push the timing for its withdrawal of stimulus further out.

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Daily Forex Report – USD lower, housing starts fall 10.6% and stocks slide