FX Market Update 19th October 2010
Today we have seen some respite for the USD. The Dollar has made gains against most currencies today as US Treasury Secretary, Timothy Geithner has said that the US will work to preserve confidence in a strong currency and will not work to devalue their currency.
Many economists have recently been writing about the global currency war taking place at the moment. It seems that the US is trying to make out that it is not their intention to join this race to devalue their currency. As a result of Geithners’ comments the USD is now testing support at 1.57 on cable. The long term outlook is still for USD weakness and this move could represent an excellent opportunity for a long position on the dollar. Gold prices have dropped 2% off their highs on this USD strength.
Sterling has had a weak day today as speculators continue to weigh up the outcome of tomorrows austerity measures. Todays UK defence review shows that cuts in the public sector could be fierce, provoking a fear in the market that the severe cuts set to reign in the budget deficit could stunt any economic recovery that is underway. There is an argument that the pound has been oversold and that we might see a correction tomorrow if the news is as expected. Unfortunately QE is looming in the near future and is also helping to add to the negative sentiment in the UK market.
Tomorrow key releases are the Bank of Englands minutes and the Fed’s beige book, this with the news on the UK’s austerity measures will undoubtedly see volatility in tomorrows trading.
Torfx Currency Dealer
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