Currencies Rally Sharply Against Buck (Midday Snapshot)


More talk of US bank capital raising and repayment of TARP continues to help bolster investor sentiment with the markets seemingly ignoring any downbeat data releases in favor of a more significant recovery within the global economy. Price action in Eur/Usd and Cable have been notable with the Euro finally breaking above the recent 1.3740 trend highs and Cable easily taking out the 200-Day SMA to trade well above 1.5600. Meanwhile, Aussie and Cad have both traded to fresh 2009 highs against the buck. Treasury Secretary Geithner has been testifying on TARP in front of the Senate Banking Committee and says that it is still not the right time to withdraw government aid. In Canada, data on the whole was softer with both CPI and leading indicators coming in slightly below consensus. However, this has failed to materially factor into price action. Elsewhere, the IMF says there are some signs of optimism for UK confidence, while also calling on Japan to be more accommodating in the current crisis. Finally, the UAE earlier today announced its decision to maintain its USD PEG.

We believe it is worth noting that although currencies continue to surge, the rally might be somewhat misleading given the fact that the Yen crosses, which are normally a good gauge of appetite for risk, have failed to join in. Meanwhile, Aud/Jpy (a very correlated gauge for risk) is even marginally lower on the day.

Written by Joel Kruger, Technical Currency Strategist for
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