Friday, 16 November 2012

Daily Afternoon Report 16/11/2012 | Forex Trading Analysis


The U.S. dollar was broadly higher against the other major currencies on Friday, as markets were jittery ahead of highly anticipated talks between U.S. President Barack Obama and Republican lawmakers on how to tackle the "fiscal cliff", while euro zone debt concerns remained.
The EUR/USD came under pressure after the European Central Bank said in a report that the euro zone's current account surplus narrowed more-than-expected in August, declining to EUR0.8 billion from an upwardly revised EUR10.9 billion the previous month,
Earlier this morning, Bundesbank’s Weidmann said that a banking union itself can be stabilizing, yet a banking union as a solution to the crisis is wrong. Weidmann also cautioned against an over-hasty banking union.
Also this morning, Swiss National Bank’s Thomas Jordan said that the central bank will continue to apply the Franc ceiling, as a stronger currency hurts the local Swiss economy. He also said that the SNB’s FX reserves expose the bank to substantial FX risk.
Meanwhile, investors remained concerned over the looming "fiscal cliff" in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.

There are fears the U.S. economy will fall back into a recession, unless a divided Congress and the White House can work out a compromise before then.
In latest news, the industrial production in the U.S. has declined in October as superstorm Sandy knocked out power in the Northeast. Output at factories, mines and utilities dropped 0.4 percent last month after a revised 0.2 percent increase in September that was smaller than previously estimated, Federal Reserve data showed today in Washington.
Furthermore, foreign investment in Canadian securities advanced to $13.9 billion in September on the strength of purchases of government bonds and corporate equities. Canadian investment in foreign securities reached a six-month high of $6.0 billion, led by the acquisition of US equities. Foreign investment in Canadian debt securities focuses on government bonds Foreign investors acquired $10.6 billion of Canadian debt securities in September, the largest such investment since May.
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