{"id":5129,"date":"2009-12-07T08:33:20","date_gmt":"2009-12-07T13:33:20","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=5129"},"modified":"2009-12-07T08:33:20","modified_gmt":"2009-12-07T13:33:20","slug":"forex-weekly-market-review-dec-07-09","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2009\/12\/07\/forex-weekly-market-review-dec-07-09\/","title":{"rendered":"Forex Weekly Market Review Dec 07, 09"},"content":{"rendered":"
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The rally in the equity markets moved back on course this week, as market participants were somewhat calmed by the news that the UAE central bank was providing liquidity to back the loans of Dubai World, and that the state owned company had plans to restructure its debt.\u00a0\u00a0 The news immediately sent investors back into the equity market as the start of the week, causing the Dollar to drop to lower levels.<\/p>\n

From a fundamental point of view, the week started off with conflicting economic news after U.S. factory activity unexpectedly grew at a slower pace in November.\u00a0\u00a0 The Institute for Supply Management reported Tuesday that its index of manufacturing activity for November moved to a reading of 53.6 from 55.7 the month before and 54.2 in September. November\u2019s reading was below the 55.0 index reading, economists had expected to see. \u00a0One must note that a reading above 50 signals expansion.<\/p>\n

In the report, the ISM found continued improvement throughout the sector. New orders, a gauge of future economic activity, came in at 60.3, indicating improvement from October\u2019s 58.5, while inventories continued to shrink, at 41.3, from 46.9 the prior month. Production, meanwhile, came in at a healthy 59.9 after October\u2019s 63.3.\u00a0 Hiring remained a soft area for the factory sector, with the employment index at 50.8, from 53.1 the month before.<\/p>\n

The housing sector also showed better than expected results as the forecasting gauge of housing-market activity climbed to its highest level in more than three years in October, thanks to government tax credits that continued drawing home buyers into the market.\u00a0 Construction pending was unchanged in October, at a seasonally adjusted annual rate of $910.77 billion compared to the prior month.<\/p>\n

On Wednesday the European Central Bank announced that interest rates would remain unchanged.\u00a0 The Euro was especially volatile but ended Wednesday\u2019s session higher as the markets reacted positively to the ECB\u2019s decision to drop fixed rate repos and scale back emergency measures.<\/p>\n

On Thursday, Markit announced that the euro zone\u2019s private sector expanded at its strongest pace for two years in the month of November, with Germany and France leading the recovery.\u00a0 The firm\u2019s euro-zone composite output index, a gauge of private-sector activity including the manufacturing and services sectors rose to a two-year high of 53.7 in November from 53.0 in October.<\/p>\n

The week ended on a strong note after strong employment data released by the Bureau of Labor statistics.\u00a0 The Department of Labor announced on Friday that Nonfarm payrolls fell by just 11,000 last month, slowing down from a downwardly revised 111,000 drop seen in October.\u00a0 Consensus estimates were for a drop of 125,000 jobs.\u00a0 The employment rate also dropped to 10% from the expected 10.4%.<\/p>\n

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Forex<\/strong><\/p>\n

The Dollar\/Yen had a turn for the better on Friday as investors began to speculate that the decrease in unemployment could lead the Fed to raise interest rates sooner than expected. Furthermore, news earlier last week mentioned that the Bank of Japan plans to introduce new liquidity measures to combat falling prices.\u00a0 Under the new program, the BoJ will provide JPY10 trillion of three-month loans to commercial banks at a fixed rate of 0.1%.\u00a0 In exchange, banks will provide regular BoJ collateral.\u00a0 The decision was unanimous but the BoJ had come under heavy pressure from the government to cooperate in battling deflation.\u00a0 The USD\/JPY surged on Friday, to break trend line resistance at 89.50.<\/p>\n

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Over in Australia the RBA raised its interest rates for an unprecedented third month in a row and left the door open to further tightening, remaining the most aggressive major central bank in unwinding emergency measures as the economy recovers briskly.\u00a0 The RBA raised its cash rate target by one-quarter of a percentage point to 3.75%, further entrenching its position as the only central bank in the Group of 20 to be raising rates.\u00a0 RBA Gov. Glenn Stevens said the 0.75 percentage point in increases since October represented a \u201cmaterial\u201d tightening, which some analysts interpreted as a sign that further tightening could occur in 2010. Others considered it a sign that the bank will soon pause. The RBA\u2019s policy board next meets Feb. 2, and financial market prices are already factoring in a 44% probability of a further rise at that meeting.<\/p>\n

From a technical point of view the AUD\/USD also dropped towards the end of the week as the good news from the U.S had a possitive affect on the Dollar. Technically speaking the AUD\/USD is now trading within a range, above support of $0.8962.<\/p>\n

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The Week Ahead<\/strong><\/p>\n

This week a wave of interest rate decisions are scheduled to hit the board including; the U.K, Canada, New Zealand and Switzerland. While investors are expecting a no-change status from most of the banks, the statements which normally accompany the decisions, will be scrutinized by investors.<\/p>\n

In addition towards the end of the week, the U.S will have a major impact on the markets, as they are scheduled to release their retail sales figure and U.Michgan Consumer Sentiment. The numbers are expected to show an increase at 0.6% and 68.5 points, respectively.<\/p>\n

Daily Forex Market Analysis provided by eToro<\/span><\/a><\/strong><\/p>\n

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don\u2019t trade with money you can\u2019t afford to lose.<\/p>\n

\u00a9 2009 eToro Blog.<\/a><\/span><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

By eToro – The rally in the equity markets moved back on course this week, as market participants were somewhat calmed by the news…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-5129","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/5129","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=5129"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/5129\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=5129"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=5129"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=5129"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}