Forex Fundamental Analysis

Fed chief Ben Bernanke, in his testimony before the Joint Economic Committee, tended to focus on some positives in the US economy, suggesting once more that “green shoots” may be evident given that the pace of contraction may be slowing and the housing sector may be bottoming.

Markets are rather quiet with most of Asian markets on Holiday today. Focus is turning to manufacturing data from UK and US. UK' manufacturing PMI is expected to have edged higher to 40 on April from 39.1 a month ago while mortgage approvals should have risen 40K in March from 38K in February.

U.S. Dollar Trading (USD) weakened substantially on the back of solid equity markets. Q1 GDP was worse than expected at -6.1% vs. -4.9% forecast. The FOMC also met and held rates at the 0-0.25% target range.

Most of the data series released yesterday were above forecast, and helped counter the negative sentiment that had built up in Asia amid stress test and swine flu concerns.

Markets were still on the defensive at the start of the Asian session as the swine flu crisis develops. Risk aversion was at heightened levels but there were signs of bottom-picking in currency markets with some viewing the risk sell-off as overdone and looking for bargains.

The yen advanced to a six-week high against the euro after the World Health Organization said the swine flu outbreak is no longer containable, triggering demand for safer assets.

The US dollar fell against the euro and to its weakest level in a week against a basket of currencies. Demand for the greenback fell on the easing of extreme risk aversion.

U.S. Dollar Trading (USD) the direction was set in the Asian session with news from China about the diversification of FX reserves. Figures released show that gold holdings had increased to over 1000 tons.

Sterling the worst performer ahead of USD on worse than expected Q1 GDO and concerns of a possible downgrade of the UKs credit rating...

One can understand how a better reading of business confidence across several thousand German businessmen could help drive the euro to a second day of gains against the dollar...

On April 20th, Bank of America announced a first quarter surge in earnings to $4.2 billion. At first blush, it looked like the kind of news that would ignite a stock market rally.

The USD suffered a violent whipsaw today first rising to highs during early New York trade before reversing to make lows against some pairs and end mixed.

US Treasury Secretary Timothy Geithner’s contribution last night showed a marked improvement from early performances and his comments produced the desired effect.

U.S. Dollar Trading (USD) traded higher with US stocks tumbling after negative leads from the Asian and European sessions.

The US dollar recouped some of its losses after weakening against most major currencies overnight.