Finotec News Archive - April 07 2009
The Dollar falls against the Yen as stocks slide and demand flutters for higher
The yen strengthened versus all of the 16 most-traded currencies on speculation credit-market losses will increase at financial institutionsTammy Wally 
07 April 2009
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| EUR/USD | USD/JPY | GBP/USD | USD/CHF | |
|---|---|---|---|---|
Resistance | 1.3675 1.3590 1.3430 | 101.70 101.45 101.10 | 1.4985 1.4960 1.4775 | 1.1485 1.1460 1.1425 |
Support | 1.3320 1.3285 1.3245 | 100.25 99.90 99.35 | 1.4640 1.4565 1.4540 | 1.1320 1.1255 1.1240 |
The yen climbed from a five-month low against the dollar and the euro as stocks declined in Asia, damping demand for higher-yielding assets. The yen strengthened versus all of the 16 most-traded currencies on speculation credit-market losses will increase at financial institutions, spurring investors to buy Japan’s currency as a refuge from the global economic crisis. “Stock losses are prompting investors to unwind short yen positions,” said Toshihiko Sakai, at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s biggest bank. “The yen is being bought, especially against currencies such as the euro.” A short position is a bet an asset’s price will decline. The International Monetary Fund will raise its estimates for U.S. bad debt to $3.1 trillion from a January prediction of $2.2 trillion, with estimates of another $900 billion of toxic assets from Europe and Asia, the Times newspaper said today without saying where it got the information. The USD/JPY is currently trading at 100.44 as of 8:38am, GMT.
Citigroup Inc., the world’s fourth- biggest trader in foreign-exchange markets, said it will sell the euro against the dollar after the 16-nation currency approached a so-called resistance based on Fibonacci numbers. The euro rose as much as 0.7 percent today to $1.3582, just below the $1.3591 level that marks the 76.4 percent retracement of the currency’s slump from March 19 to March 30. Resistance is an area where orders to buy or sell a currency may be clustered. “We’ve come a long way in a short space of time,” Tom Fitzpatrick, chief technical analyst at Citigroup in New York, said in an interview today. The 76.4 percent level “is the one where the euro has a tendency to do an awful lot when it comes off highs and lows of moves.” The EUR/USD is currently trading at $1.3350 as of 9:00am, GMT.
Sterling turned lower against the dollar on Monday, erasing earlier gains which had propelled it to a two-month high against the U.S. currency as equity markets went into the red, dampening investor sentiment. UK equities fell 1.2 percent, cutting gains earlier in the session to mirror falls on Wall Street which were driven by losses in banking stocks after an analyst initiated coverage on several large banks with "underperform" or "sell" ratings. Earlier in the day, figures from the British Society of Motor Manufacturers and Traders showed UK new car sales tumbled by 30.5 percent in March from a year earlier, exacerbating worries about the dire outlook for the auto sector. The GBP/USD is currently trading at $1.4725 as of 9:08am, GMT.
Finotec Analysis Team
07 April 2009
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