Thursday, August 4, 2011

ECB President Jean-Claude Trichet on Bond Buying

Previous session overview
The euro reversed direction and fell sharply against the safe-haven Swiss franc Thursday on concerns that European Central Bank bond purchasing efforts could slow. 

The move was significant in that the Swiss National Bank has moved this week to weaken the franc, following the franc's record-setting rise in recent weeks on the back of U.S. and euro-zone debt issues. 

In remarks to press after a policy meeting, however, ECB President Jean-Claude Trichet said bond-buying plans are not dormant, which helped the single currency to recover from its worst losses. 

The euro recently traded at CHF1.0995 from CHF1.1032 late Wednesday in New York.

The Canadian dollar gained early Thursday on U.S. jobless claims data, offsetting some of the weakness brought on by Japanese intervention.

The U.S. dollar fell to CAD0.9706 briefly, before rebounding to CAD0.9721, from CAD0.9724 ahead of the data. 

Overnight, Japan stepped into the currency markets, selling the yen in London, in an attempt to stem the rise of its currency, which skirted near all-time highs against the U.S. dollar. 

Despite Japan's lackluster economic outlook and massive government debt, the yen has emerged as a safe haven for investors facing growing uncertainty in the U.S. and Europe. 

The strong yen is worrying Japanese officials as it handicaps major exporters trying to recover from disruptions caused by the March 11 earthquake and tsunami.
Market expectation
The GBPUSD has been ranged between USD1.6225-USD1.6475 and it is now at the middle of this range, informed analysts. According to them if the Pound holds below USD1.6400 it is likely to fell to test the support at USD1.6225 in the coming session, pointing out that the immediate outlook is mixed. On the bigger picture failure to see a strong up move above USD1.6400 this week, retains the overall downside pressure and the threat of Trend reversal.

Pound is stronger than Euro, so the bias there is bearish, as long as below GBP0.8720 strong resistance level now. Daily low is located at 0.8670 area, would expect the slide to extend near GBP0.8620 once below this last, said dealers.