Greenback Surges During Tuesday Morning Trading 8 January 2013
by ForexMinute.com, Jonathan Millet, Chief Editor
USD EDGES HIGHER
The USD edged higher in opposition to the yen in the Asian trading session, thus reaching its two and half year high at one point. In Tokyo, the USD/JPY pair was trading at 87.63 yen, tumbling a little from a previous high of 87.660 yen struck recently.
In the intervening period, it is hoped that markets will concentrate more on the US private sector labor data as an indicator of the economy’s health. Most analysts are predicting an increase of 150,000 new jobs last month, which is 4,000 more than in November, with the rate of unemployment which remains unaffected at 7.7%. The EUR/USD pair was trading at $1.3042, which is a loss of 0.1% but better from an earlier low of $1.3023.
The euro declined 0.5 percent to 114.65 yen, turning away from last Wednesday's 18-month high of 115.99. In addition, it eased 0.2 percent in opposition to the USD to $1.3043, slightly above last week's three week low.
At the end of last week, the USD had gained significantly after the minutes of the Federal Reserve showed that decision makers have considered ending the bond buying stimulus as early as this year.
There are a number of analysts who say that the data suggests the euro has narrow scope for further short-covering rallies as traders cut earlier bets on the euro falling.
Traders may look at the Italian and Spanish auctions at the end of the week. High demand may possibly assist the euro to gain against the dollar.
YEN RALLIES AGAIN
The yen rallied again from its two and half year low against the dollar on Monday. The USD Index gained for the fourth consecutive day. Minutes of the US Central Bank’s latest meeting has shown that decision makers may restrict monetary stimulus this year.
The yen gained 0.3% percent to 87.86 per dollar as of 2:55 pm in Tokyo from the 4th of January, when it reached 88.41, its weakest since July 2010. The yen gained 0.6 percent to114.53 per euro, after posting a 1.4 % decline last week.
In spite of hopes about the new economic policies of the Japanese government, there is every possibility that the yen will continue to stay under pressure simply due to the trade deficits and the selling of the yen associated with Japanese firms' acquisitions of overseas businesses.
EQUITIES DIVE ON WALL STREET
There was much bearishness when it came to the leading U.S. equities yesterday. Traders decided to ditch them ahead of the earnings data later on this afternoon. In addition, investors sold the leading stocks due to them being overvalued during last weeks' trading session.
The Dow Jones, Nasdaq 100 and S&P 500 were the big losers yesterday, as there were just a lack of factors supporting these indexes.
Oracle slipped 0.52% to $34.43. Exxon Mobil fell 1.16% to $87.93. Merck gained 0.36% to $42.12. Kodak gained 1.95% to $9.39.
CRUDE OIL PRICES FALLS
Crude oil prices declined on Monday on the uncertainty about what the US Federal Reserve may possibly do with its bond purchase program and data showing the US unemployment rate as unchanged.
Traders were of the view that the Fed may cut down the program, which in turn may possibly send US interest rates higher, and therefore the dollar up. Ultimately, this would hurt the price of oil. Crude, which is priced in dollars, tends to fall, as the dollar strengthens and makes crude more expensive for investors holding foreign currencies.
Jonathan Millet Chief Editor of ForexMinute.com