Finotec News Archive - January 22 2010
Sterling falls on UK fiscal concerns and investor fears
The GBP/USD is currently trading at $1.6200 as of 20:40pm, GMT, with a bullish trendTammy Wally 
22 January 2010
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| EUR/USD | USD/JPY | GBP/USD | USD/CHF | |
|---|---|---|---|---|
Resistance | 1.4297(M) 1.4218(M) 1.4177(M) | 92.19(M) 92.05(M) 90.79(M) | 1.6370(M) 1.6297(M) 1.6250(M) | 1.0580(M) 1.0528(S) 1.0509(M) |
Support | 1.4030(M) 1.4007(M) 1.3965(S) | 90.06(M) 88.83(M) 88.58(M) | 1.6115(M) 1.6063(M) 1.5900(M) | 1.0404(M) 1.0358(M) 1.0309(M) |
The British pounds fell broadly on Thursday against the dollar on concerns about UK fiscal health and very weak UK money supply data. Although British public sector borrowing was slightly less than expected in December, it still hit record highs for the month and the financial year to date, highlighting the UK's poor fiscal health. This, along with news of a record 1.1 percent monthly fall in M4 money supply in December, added to the pound's earlier losses, when jittery investors sold the currency before the data was released.
A Bank of England survey showed the flow of lending to British businesses picked up in November for the first time since January 2009. Most analysts expect the BoE to halt its asset-buying QE program in February, once the current target has been met but remain split over when policy might be tightened. The GBP/USD is currently trading at $1.6200 as of 20:40pm, GMT, with a bullish trend.
The yen rallied against all of its most-traded counterparts as President Barack Obama proposed trading restrictions on financial institutions, discouraging demand for higher-yielding assets. “There’s a lot of ‘wow’ going on right now and certainly risk aversion,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. “The initial kneejerk reaction is to sell the dollar and U.S. equities. The winner is the yen.” The dollar slid against the yen for the first time in four days as Obama called for limiting the size and trading activities of financial institutions as a way to reduce risk taking and prevent another financial crisis. The proposals will be part of an overhaul of regulations and would prohibit banks from running proprietary trading operations or investing in hedge funds and private equity funds. The USD/JPY is currently trading at 90.40 as of 20:48pm, GMT, with a bullish trend.
Canada’s dollar touched a low as stocks and oil tumbled and investors speculated China will seek to curb its economic expansion, dimming the appeal of currencies that traditionally benefit from global growth. “It’s a global wave and Canada is riding it,” said Derek Holt, assistant chief economist in Toronto at Bank of Nova Scotia, the nation’s third largest lender. “Much of it’s related to global policy emanating out of China.” The gross domestic product of China, the world’s largest consumer of many of the raw materials that Canada exports, grew 10.7 percent last quarter from the year before, the nation’s statistics bureau said. The USD/CAD is currently trading at $1.0512 as of 21:00pm, GMT, with a bullish trend.
Finotec Analysis Team
22 January 2010
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Event |
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Period | Previous | Forecast |
Significance
|
Actual | |
|---|---|---|---|---|---|---|---|---|
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