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Video for April 18th, 2008 (3 min 12 sec): Week Recap: Dollar Gains on Citigroup, Carry Trade Sentiments Propel High-Yielders USD/JPY - Citigroup Results and Rally in US Stocks Inject Risk Appetite Into Markets 
The Dollar had a strong day vs. the Yen as Citigroup posted a $5.11 billion Q1 loss, which was actually not as bad as economists anticipated. In fact, investors are becoming less pessimistic, thinking that the worst of the credit squeeze is over. The USD/JPY pair is highly correlated with investor sentiments on the US markets, and surged 200 pips to touch 104.40 by 1 PM EST. EUR/USD - Dollar Strengthens and Pares Earlier Week's Losses
Dollar strength was clearly evident against the Euro as well. After setting a session high following German Producer inflation data, the Dollar ripped off a 230 pip rally bringing the pair down near 1.5710 close to its levels from Monday. GER PPI Shows High Inflation German Producer prices, a leading indicator for inflation, accelerated 4.2% on the year and 0.7% on the month in March. The annual rate was the fastest in 15 months, but as we saw the news was overpowered by other factors. GBP/JPY - Pound Rallies 1000 Pips During the Week, Hit Support Near 209
Investors re-opened carry trade and the Pound-Yen had another monster day climbing 400 pips from its overnight low, adding to yesterday's gains. Yesterday, the Bank of England announced that it will take on 30B pounds of bad mortgages to alleviate the credit squeeze and revive mortgage lending. The news helped the pound rally 1000 pips against the Yen since Tuesday. GBP/CHF - Pound Gains 800 Pip in 2 Days
The Swiss Franc, also a funding currency for carry trade because of its low interest rate was heavily pressured. Here against the Pound, we see a 400 pip climb during today's session. And the past 2 days have seen a move of 800 pips! The Franc fell close to 200 pips vs. the Euro and Dollar in today's session as well. AUD/JPY - Aussie Rallies 450 Pips vs Yen During The Week
Other destinations for carry trade like the Australian and New Zealand Dollars also performed well against the Yen today. The Australian Dollar capped off a 450 pip rally against the Yen after its low on Monday. The pair found resistance near 97.40 after the NY open. CAN Wholesales Decline 1.8% in Feb, Leading Index Flat in March In Canada, wholesale sales disappointed, falling 1.8% in February. Declines were led by a 4% drop in the automotive sector. The leading index remained unchanged for March after it declined an upwardly revised 0.2% USD/CAD - Loonie Falls then Gains in Back and Forth Session
Following the news releases the US Dollar-Canadian Dollar retested its highs from yesterday near 1.0140. The Loonie was able to pare those losses as the NY trading session progressed in pretty volatile back and forth action. The Greenback recovered yesterday after touching parity after the Loonie had rallied around 270 pips earlier in the week on record high oil prices. Next Week Next week the Bank of Canada, and the Reserve Bank of New Zealand, decide on interest rates. With easing inflation but weaker sales, policy members in Canada may cut rates by 50 basis points. Some important releases from the US include durable goods data and new home sales. Australia will reveal quarterly inflation data which the central bank monitors closely. |
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