On Tuesday January 20th, the US Dollar surged again against all currencies when the International Monetary Fund (IMF) cuts its global growth forecast for 2015. There are now 12 year highs with the USD Index up 0.27% to 93.10. The Dollar even knocked the safe-haven YEN off its perch as the last two days have shown the YEN lose all of last weeks gains.
The poor old Euro maintained its downward weakness as it awaits to see if the ECB embarks on an outright Quantitative Easing (QE) program with the upcoming meeting for decisions to be made on this Thursday. It will be so interesting to watch Market price action when Mario Draghi starts to open his mouth to see what affect he has on the EURO.
The Canadian Dollar is also continuing with its plummeting values as Manufacturing Sales dropped 1.4% as it went on to hit the USD/CAD 1.2110 mark. What will the Bank of Canada do when it makes a Policy statement later on in the US session? The Loonie was also down against even the lowly Euro.
Of course the Big News that is still being felt with the Markets trying to sort out the pieces after the Currency “nuclear explosion” brought on by the Swiss National Bank (SNB) changing its Policy on keeping the EUR/CHF peg of 1.2000 which has caused immense damage and losses to many Brokers and Investors. FXCM, the US largest foreign-exchange broker, took a 250 million dollar hit and will now go after retailers for any losses still on their books. Help has come in for FXCM with a deal with Leucadia National Corp forging a deal to keep them afloat. Lots of other brokers have declared insolvency and will close up. Handling “Leverage” (200-1) is being blamed for the carnage as this move happened so fast, that to close out a losing trade was not possible. The full force of all of this will not be known for months as Banks and Hedge Funds all over the world will be financially hurt with losses to be showing up in their future earning reports.
This brings us to the Stock Markets, where earnings announcements are what the markets are all about in relationship to Investment and stock price. Tuesday showed the US Markets, the DOW and S&P 500 having some impressive late trading recovery to end the day slightly in positive territory. The Markets were choppy through the trading day.
OIL’s recovery from last week was short lived as Monday and Tuesday OIL trading activity has only been on the sell side as last Thursday high of 51.00 seems a mirage, as price has settled at the end of the day at 46.53.
Gold and Silver were winners.(Gold 9.00+) We have often mentioned a solid base Gold had built in the month of December. Since January 02, Gold has done nothing but go up with its best run in four years and its highest level in 5 months.
There is lots happening for Wednesday in the News announcements. New Zealand has already posted its CPI results which were negative and has weakened the overall strong Kiwi in early trading for this Asian session. Bank of Japan will be making a Monetary statement and later the Bank of England will be doing the same – so look out Markets as these releases can move price quickly. During the US session the CAD will be releasing Wholesale Sales along the US important Building permits. To top off the day, the Bank of Canada will have its turn at giving their statement on Interest Rate changes.
