Published: September 20, 2007 7:38 AM
The US Dollar is under full assault in the foreign currency market. Today, another psychologically significant occurrence solidified the downward spiral of the dollar. In what seemed to be an inevitable move, EURUSD broke north of the 1.40 level. Volume has been heavy through specified areas, with the full concentration of activity focused in EURUSD. Ranges have been broad across the board as volatility spiked. The London Session has seen sporadic flurries of today, providing a one-sided trading environment in which USD bears reaped rewards.
European traders wasted no time in going right after 1.4000 in EURUSD. Once London opened at 0200 EDT (0600 GMT), EURUSD started the ride higher. Within 30 minutes, the pair broke above the pivotal level, notching new all-time highs. The market simultaneously crushed the USD across the board. USDCHF collapsed through 1.1800, sliding to multi-year lows. GBPUSD exploded nearly 100 pips on the move to 2.0090. The story was all the same� the Dollar has plunged to new lows led by a higher EURUSD. Once the bulk of the move occurred and EURUSD peaked around 1.4065, which occurred near 0325 EDT, the marketed calmed, shifting its focus to the British Pound.
At 0430 EDT, UK data hit the market. August Retail Sales blew away estimates, coming in at a robust +0.6% against forecasts of +0.0%. Cable shot up about 40 pips from 2.0060, adding to the USD pressure. A mere 10 minutes later, the Bank of England�s Mervyn King testified regarding recent credit issues in the UK. The market did not respond to the majority of the commentary, however one headline caught the eyes of traders. King pointed out that cutting interest rates at the first sight of every problem is not the way to go. GBPUSD popped higher, but remains in a similar spot to the post-retail sales reaction level at 2.0080.
New York traders have the following on their radars: Goldman Sachs and Bear Sterns earnings report, commodities (specifically oil and gold), and US equity markets.
Upcoming Economic Data Releases (New York Session)
0830 EDT US Initial Jobless Claims, consensus: 321k (relevance: low)
0830 EDT US Continuing Claims, consensus: 2575k (relevance: low)
0830 EDT July Canada Wholesale Sales, consensus: +0.5% MoM (relevance: low)
1000 EDT Aug US Leading Indicators, consensus: -0.4% (relevance: medium)
1200 EDT Sept Philadelphia Fed, consensus: 2.6 (relevance: medium)