Dull Day On The Markets

Currencies Direct January 21st 2011 - 2 minute read

hit the forex markets yesterday with little influence from economic data. We
received more dialogue from European officials concerning their Emergency
Funding Facility, but really only going over old material so no material effect
on rates. Trading has looked to concentrate on testing the technical resistance
in Eurodollar at 1.3525. We are sitting just above that level at present but we
will need to close higher this afternoon in order to signal a shift higher. This
concentration on buying Eurodollar has caused the Euro to strengthen across the
board with both Sterling
and Yen falling.

data from the US
was a bit mixed although overall deemed positive for the economy with
interpretation of the numbers largely on the side of them bolstering the
recovery. Analysts still consider this to Dollar supportive on the grounds that
the currency will be deemed as becoming a growth currency in the months to
come. No data from the US
scheduled this afternoon.

items of interest from peripheral currencies. Firstly the Kiwi Dollar received
a bit of a lift yesterday following the release of the New Zealand
retail sales numbers for November. The headline figure was reported at +1.5%
against expectations of +1.1%. The move higher was short-lived however and it
soon fought a losing battle as the Dollar drew support from the previous
afternoon’s US

a comment from the Riksbank Deputy-Governor, Wickman-Parak indicates a possible
further strengthening of the Swedish Krona. He suggested that rate hikes from
the Central Bank would help contain unsustainable levels of credit growth; this
would imply a further strengthening of the currency. Later on, the Swedish PM,
Reinfeldt, said that Swedish industry can be competitive even with a stronger
currency, further suggesting that policy-makers are still comfortable with
further Krona appreciation. Interestingly, these comments appear contrary to
the approach being touted by the Norges Bank, from where an official was reported
as saying that further hikes in NOK interest rates would be detrimental to the
Norwegian economy as they would cause a strengthening of the currency.

by Tim Lewis

Written by
Currencies Direct

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