Breaking News

Momentum Returns But Dollars Aren't Rallying

By Kathy LienForexDec 19, 2012 11:02AM ET
Momentum Returns But Dollars Aren't Rallying
By Kathy Lien   |  Dec 19, 2012 11:02AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
We are finally beginning to see some momentum based moves in the FX market now that most of the major currencies have broken out of their recent trading ranges. Optimism about deal on the U.S. fiscal cliff and better-than-expected German data propelled the EUR/USD to eight-month highs. All of the European currencies are performing well this morning but the commodity currencies continue to suffer with NZD/USD leading the sell-off. A wider current account deficit for New Zealand, smaller increase in leading indicators for Australia, concerns about China and expectations for another rate cut by the RBA next year are some of the reasons why the commodity currencies have not been able to participate in the rally. For the time being, it looks like European currencies should continue to rally while commodity currencies underperform.

U.S. Housing
Mixed U.S. housing market numbers did not stop USD/JPY from rising to its highest level since April 2011. Housing starts fell 3% but building permits rose 3.6% to its highest level since 2008. Overall the housing market continues to benefit from low interest rates but the pace of the U.S. recovery has hampered the momentum. Even though starts declined, the deterioration represented a pullback after a strong October. FX traders should continue to monitor headlines for news on the Fiscal Cliff but tonight's Bank of Japan monetary policy announcement will determine whether the Japanese Yen has more room to fall. The BoJ is widely expected to increase asset purchases by five to 10 trillion yen which may be enough to drive USD/JPY higher but if the central bank shifts to an open-ended asset purchase program like the U.S. and Europe or bend to Abe's demands and raise their inflation target from 1% to 2%, we expect a very sharp rally in the Yen crosses.

Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Momentum Returns But Dollars Aren't Rallying

Related Articles

Momentum Returns But Dollars Aren't Rallying

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Are you sure you want to delete this chart?
Write your thoughts here
Replace the attached chart with a new chart ?
Post also to:
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Post 1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email