The U.S. Dollar is finished mixed on light volume as traders evened up positions ahead of tomorrow’s U.S. Unemployment Report. The Dollar opened weaker against most major Forex markets this morning but erased losses as the day wore on. Today’s weaker than expected U.S. ISM Services Report helped the Dollar regain some of its losses as this report showed the U.S. economy was still weak. Some traders feel that weakness in the services sector will mean that tomorrow’s unemployment report will show more job losses than estimated. Yesterday’s ADP employment report was worse than estimated. This too weighed on traders’ minds.
This morning the European Central Bank announced that its benchmark interest rate would remain at 1.0% as expected. ECB President Trichet said that the road to recovery would be “bumpy” while explaining why the central bank is in no hurry to withdraw its emergency stimulus. After an early morning gain, the Euro lost ground to the Dollar and finished lower.
Demand was a little stronger today for the higher yielding NZD USD and AUD USD, but overall these two markets remain rangebound. Yesterday it was reported that the Australian economy grew more than expected but today a report indicated that the trade deficit widened. Exports fell and imports increased because stimulus plans increased domestic demand. Traders are anticipating a rate hike by the Reserve Bank of Australia before the end of the year. Tomorrow’s U.S. employment report will dictate whether traders will renew their quest for higher yielding currencies or decide that safety is best.
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