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Dollar Unfazed by Weaker Data, Focused on Europe

This morning’s U.S. economic reports elicited little reaction from a market that is focused on regional developments and firm commodity prices. The dollar is trading unchanged to lower against most of the major currencies with the exception of the British pound which was hit hard by weaker retail sales. The latest U.S. economic data shows continued softness in the U.S. economy. There is no question that the recovery is underway but the pace has been sluggish due to setbacks in various industries. 

Durable goods fell 0.9 percent last month, which was much weaker than expected. However the softer release was tempered by the sharp upward revision to the prior month’s report. The decline in orders for items made to last for a few years was dragged down by a sharp drop in defense and transportation orders. Excluding the pullback in defense demand, new orders rose 0.4 percent. 

Jobless claims remained below 400k for a second week, after rising slightly above this mark in early March. Weekly

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Pound Vs. Euro: Tie Game for Now?

While I’m fondest of analyzing all currencies relative to the Dollar (after all, it’s what I’m most familiar with and is involved in almost half of all forex trades), sometimes its interesting to look at cross rates.

Take the Pound/Euro, for example, arguably one of the most important crosses, and one of a handful that often moves independently of the Dollar. If you chart the performance of this pair over the last two years, however, you can see the distinct lack of volatility. It has fluctuated around an axis of 1.15 GBP/EUR, never straying more than 5% in either direction. In fact, it’s sitting right at this level as I compose this post.

Yesterday, I read some commentary by Boris Schlossberg (whom I interviewed in 2010), Director of Currency Research at GFT. In the

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Canadian Dollar Knocked Down by Retail Sales

The Canadian dollar weakened against its US peer as the report showed that the retail sales in Canada unexpectedly decreased for the second month.

The Canadian retail sales decreased 0.3 percent in January, posting the second decline in two months. Analysts predicted growth by 1.1 percent. The main contributor to the decline was the lower sales at new car dealers. The Standard & Poor’s 500 Index dropped 0.4 percent.

On the positive note, the composite leading index rose 0.8 percent in February, double its gain in each of the previous three months. Somewhat lower increase by 0.7 percent was expected. April delivery for crude oi

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FX: Is G7 Intervention Enough?

Unprecedented times call for unprecedented measures. For the first time in more than a decade, central banks around the world stepped into the foreign exchange market and jointly intervened to sell the Japanese Yen. The last time they acted together was in September 2000, when the euro fell to a record low. At the time, the Federal Reserve, Bank of England, Bank of Japan and other central banks joined the European Central Bank in buying euros. Since then, they have not shown this kind of solidarity up until today. Over the past few years, currencies have reached extreme levels and individual central banks have intervened but outside of language changes made to the G7 statements, the Group of 7 has not done more than verbally intervene in the currency market. This is why last night’s decision was such a significant one. Japan successfully convinced its G7 partners to jointly intervene in the foreign exchange market to sell the Japanese Yen. Read more text…

British Pound Continues Gradual Ascent

The British Pound has risen almost 15% against the Dollar over the last twelve months. It seems that the markets are ignoring the fiscal concerns that sent the Pound tumbling in 2010, and focusing more on inflation and the prospect of interest rate hikes. At this point, the Bank of England (BOE) is now racing with the European Central Bank (ECB) to be the first “G4″ Central Bank to hike rates.

You can find cause for optimism towards the Pound in technical factors alone. That’s because while dozens of currencies appreciated against the Dollar in 2010, most were starting from a stronger base. For example, the Canadian and Australian Dollars collapsed during the credit crisis. Howev

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Competition Heats Up in Retail Forex

The last few weeks have witnessed a number of major developments in the retail forex world: more mainstream firms  entering the fold, and existing firms are moving to beef up their forex operations. Not only will this permanently alter the competitive landscape, but it should also benefit traders in the form of more choice, lower prices, and increased transparency.

The Wall Street Journal was first to report that Charles Schwab is in the early stages of introducing forex to the array of financial products available to its customer base: “Schwab, the largest online broker, disclosed in a slide presented at its recent winter business update that it was ‘analyzing the forex opportunity’ in 2011.” Unbeknownst to me, TD Ameritrade made a stealthy entry into forex in 2009, though its purchase of ThinkorSwim. Ameritra

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USD: What Will Big Ben Say?

The U.S. dollar may have rebounded ever so slightly against the Japanese Yen and Swiss Franc, but it remains weak against all the other major currencies. The reason why investors have been reluctant to hold U.S. dollars is because they believe that the Federal Reserve is on a completely different track than central banks in other parts of the world. The Fed has a big decision to make over the next 2 meetings and it involves deciding to end or continue Quantitative Easing.  Recent comments from Federal Reserve officials suggest that many members within the central bank believe that it is too early to pare back stimulus. Some Fed Presidents even call for a compromise that involves a gradual slowing in asset purchases.  Al Read more text…