Forex Market Update: US Dollar Rallies on Lower Oil Prices

[DailyFx]

New trend highs for the USD were seen in many currencies today in Asia with a late USD rally sending EUR, GBP, AUD and NZD sharply lower. USD-JPY gains were mitigated however by broad-based JPY cross selling with reports that Japanese forex margin traders were selling off their positions.



Economic Events 09/03/2008

05:03 GMT -The U.K. labor market is deteriorating quickly, according to overnight data from Recruitment & Employment Confederation and KPMG. The REC/KPMG permanent staff index fell at its sharpest pace in August since November 2001, down to 41.5 from 44.1. Salaries grew by its weakest rate in five years, suggesting a slacker labor market is keeping a lid on wage demands, which should bring some relief to the BoE. Meanwhile, temporary staff placement, which so far has been holding up well, as employers faced with increasing uncertainty have permanent staff for temporary staff, fell to 46.4 from 50.7 and is hence indicating contraction. Data hence suggests that the U.K. labor market is now seriously starting to slacken.

05:10 GMT - U.K. August Nationwide consumer confidence index held steady at 52, the lowest reading since the series began in 2004 and after the July reading was revised up to 52 from 51. This is largely in line with the more carefully watched GfK indicator and highlights the current dire state of the consumer sector. However, lower petrol prices going forward could help to boost household confidence somewhat in Q3, should oil prices fail to rebound.

05:38 GMT - U.K. institutions may have tapped the BoE liquidity scheme of GBP 200B, according to an estimate by UBS. The size of the liquidity scheme, which lets banks swap mortgage securities for Treasury bills, was originally set to GBP 50B but should demand be greater, more funds would be made available. The previous estimates for the 6 month window, ending in October has been GBP 90-100, so the UBS estimate is significantly higher than previous projections and would suggests that U.K. financial institutions are relying heavily on the BoE to raise funds.

Forex Market Highlights

New trend highs for the USD were seen in many currencies today in Asia with a late USD rally sending EUR, GBP, AUD and NZD sharply lower. USD-JPY gains were mitigated however by broad-based JPY cross selling with reports that Japanese forex margin traders were selling off their positions. The only data of note over the session was the release of the Australian Q2 GDP which came in marginally under expectations at 0.3%. In New Zealand, Auckland home sellers Barfoot and Thompson confirmed that home sales remain weak. Pressure on the KRW continued with the USD-KRW rising sharply to 1,158.7 and fresh four-year highs before purported intervention capped the gains.