Daily Morning Report 21/11/2012 | Forex Trading Analysis

The dollar strengthened against the world's major global currencies on Wednesday as investors remained camped out in the safe-haven currency awaiting word of progress over the U.S. fiscal cliff.

Investors were on edge due to uncertainty over the U.S. fiscal cliff, a combination of expiring tax breaks and inbound spending cuts converging at the same time after the end of this year. Earlier, Federal Reserve Chairman Ben Bernanke urged the White House and Congress to find a way to steer the U.S. economy away from the cliff, which fueled demand for the dollar.

The euro continued to weaken on reaction to a Moody's decision to downgrade France's sovereign ratings to Aa1 from Aaa. Meanwhile, in Europe, eurozone policymakers opened a meeting to discuss Greece's finances, with a EUR31.5 billion tranche of aid pending approval.

Eurozone finance ministers and senior International Monetary Fund officials ended a nearly 12-hour meeting with no agreement on how to bring Greece’s debt down to a sustainable level, and they failed to approve an overdue tranche of bailout loan money for the country despite a looming threat of bankruptcy.  The failure to approve immediate payment of a long-overdue E31.5 billion loan tranche to Greece came despite official acknowledgement from Jean-Claude Juncker, who chairs the Eurozone finance ministers’ group, that Greece had met all the conditions demanded of it. The 17 Eurozone finance ministers, together with the heads of the European Central Bank, International Monetary Fund and the EU’s Economic and Monetary Affairs Commissioner, Olli Rehn, discussed a package of options to reduce Greece’s national debt to 120% of GDP by 2020 – the benchmark for sustainability upheld by the IMF.

Elsewhere in the U.S., housing starts rose 3.6% in October to a seasonally adjusted annual rate of 894,000, the biggest gain in four years. The number of building permits issued in October fell 2.7% to a seasonally adjusted 866,000. Both figures beat expectations.

In other news, the Bank of Japan met earlier and left benchmark interest rates unchanged at 0.10%. The monetary authority also made no changes to the country's JPY91 trillion asset purchasing plan, though the yen weakened to a 7-month low against the greenback on Wednesday amid building market sentiment that looser policies are on the way after December's elections.

Japanese opposition leader Shinzo Abe may become the country's next prime minister during Dec. 16 elections. Abe has said he favors more aggressive monetary stimulus measures to jolt the Japanese economy.

Later Wednesday, the U.S. will release weekly government reports on initial jobless claims and crude oil inventories.  In addition, the University of Michigan is to release revised data on consumer sentiment and inflation expectations.

Daily Afternoon Report 20/11/2012 | Forex Trading Analysis

After another rally spiking to 1.2830 as the NY session opened, the EURUSD eased back to the 1.2800 psychological level. Fed's Lacker is in favour that the US Congress limits the central bank's credit policy and is against linking the policy to the unemployment rate. Also, Reuters reported that Italy may veto the EU budget if it goes against the country’s interests. The pair is currently trading sideways at 1.2800 after the release of weaker US building permits and better than expected housing starts.

Later Bernanke (FED) will speak and might 

Daily Morning Report 20/11/2012 | Forex Trading Analysis

The dollar strengthened against the world's major global currencies on Tuesday after Moody's stripped France of its triple-A rating, which wiped out appetite for risk.

Moody's Investors Service earlier said it had cut French sovereign ratings to Aaa1 from Aaa, which sent investors ditching the EUR/USD and commodities to digest the news, which made the dollar the perfect safe haven.

As Moody’s published earlier, “France's long-term economic growth outlook is negatively affected by multiple structural challenges, including its gradual, sustained loss of competitiveness and the long-standing rigidities of its labour, goods and service markets.” Furthermore,  “France's fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short term due to subdued domestic and external demand, and in the longer term due to the structural rigidities noted above.”

The market kept an eye on the Bank of Japan, which was holding a monetary policy meeting later Tuesday.

The Bank of Japan may hold benchmark interest rates unchanged, though upcoming elections could see opposition leader Shinzo Abe become the next Prime Minister. Abe has called for more aggressive policy action and stimulus from the Bank of Japan.

In other news, foreign direct investment in China fell for the 11th time in 12 months as labour costs rose, a slowdown threatened to drag growth to a 13-year low and a territorial dispute with Japan weighed on trade.

Later Tuesday, the U.S. is to publish official data on building permits as well as data on housing starts, while, the U.S. Fed Chairman is due to deliver a speech titled "The Economic Recovery and Economic Policy" at the Economic Club of New York. Finally today, the Eurozone of finance ministers will hold talks in Brussels to discuss financial issues in the bloc.

Daily Afternoon Report 19/11/2012 | Forex Trading Analysis

  The U.S. dollar was lower against the other major currencies on Monday, as optimism over signs of progress in resolving the U.S. fiscal cliff and hopes that Greece will soon receive its next aid installment dampened demand for the greenback. Traders were looking ahead of a meeting of the eurogroup of euro zone finance ministers on Tuesday to discuss whether Greece will receive its next tranche of financial aid. A decision on unlocking Greece’s next bailout aid has been delayed by disagreements between officials from the International Monetary Fund and Europe on how best to reduce the country’s debt to manageable levels. Concerns over the economic outlook for the euro zone persisted after Germany's central bank warned earlier that economic growth in the bloc’s largest economy is weakening as a result of the crisis in the region, as well as problems in the global economy.

  On Monday, the National Association of Realtors said that U.S. existing home sales rose by 2.1% to a seasonally adjusted 4.79 million units in October from September’s revised total of 4.69 million. September existing home sales were initially reported at 4.75 million units. Analysts had expected U.S. existing home sales to rise to 4.75 million units in October.

Daily Morning Report 19/11/2012

The dollar weakened against the world's major global currencies on Monday on budding hopes U.S. policymakers will steer the economy away from a fast-approaching fiscal cliff. If untreated, the fiscal cliff could siphon over USD600 billion out of the U.S. economy next year alone in the form of rising taxes and cuts to government spending.

Last Friday, Democratic and Republican congressional leaders met with President Barack Obama earlier to discuss ways to avoid the cliff, and both sides emerged afterwards expressing optimism for a deal, which continued to draw investors out of the safe-harbor dollar on Monday.

In other news, the euro traded steady to higher against the dollar on Monday as investors went long ahead of a Tuesday meeting of Eurozone finance ministers that could lead to fresh bailout money flowing into Greek coffers.

On Tuesday, Eurozone finance ministers will meet to discuss unlocking Greece’s next tranche of aid. Expectations that European Union policymakers and the International Monetary Fund will disburse aid to crisis-weary Athens began to build early in the session and stoked demand for higher-yielding currencies, which came at the dollar's expense.

In latest news, as released by Rightmove House Price Index, “This month sees a drop of 2.6% (-£6,407) in the asking prices of properties coming to market, following the now familiar post-credit-crunch pattern of falls in November. However, this is the least severe November fall since 2009 and still leaves prices 2% (+£4,617) ahead of where they were this time last year – the highest annual rate of increase achieved in November for five years”.

Later Monday, the U.S. is to release industry data on existing home sales, a leading indicator of economic health.