USD Surges Prior to Eurozone Rate Decision 10 January 2013

by Jonathan Millet
(London)

DOLLAR

USD finds temporary support

The greenback found temporary support in early morning trading. It climbed versus a number of its peers. This is in addition to the gains which it made yesterday versus the pound and its other main peers.

There is a lot of fluctuation going on this morning due to the rate decision coming up from the Eurozone. Therefore, traders are unsure of which way the markets will go. The U.S. is at the forefront of news today, such as the bond auction later on.

One of the most volatile pairs this Thursday will be the EUR/USD pair.

EURO

EUR under downward pressure

There were not many gains for the euro as it was flat in opposition to the dollar at $1.3088 after unenthusiastic economic data the previous day stopped the recent gains for the single currency, with figures showing Eurozone’s joblessness had hit a record high. Many investors were also in anticipation of figures on the German industrial production after data of the previous day showed a fall in German exports, inducing worries about the health of the Eurozone’s largest economy.

On the other hand, analysts informed that the European Central Bank meeting scheduled on Thursday remains a key driver of the euro this week, with doubt over whether the ECB would cut rates again.

YEN

Japanese yen becomes weak soon after the start of the policy meeting

The Japanese yen went on in its declining trend on Wednesday soon after the central bank officials and top officials of the Government of Japan started the policy meeting which gave an impetus to the investors to hope for fresh action that will weaken the currency.

The USD rose 0.7% to 87.74 yen, which has reversed its earlier losses that it had incurred on the previous day. On the other hand, the euro rose 0.8% to 114.79 yen.

Most international investors believe that the new administration in Japan is very serious about weakening the yen, and it is only a matter of time before the Bank of Japan takes action to implement some radical policy in this regard.

CRUDE OIL

Crude oil prices decline as US crude supplies grow

Crude oil prices declined to $93 a barrel soon after the reports went public that in the US the crude supplies had risen which in turn outweighed the forecast for higher demands this year. The delivery of benchmark oil for the month of February went down by 9 cents to $93.06 a barrel in electronic trading on the New York Mercantile Exchange.

The Brent crude, which is utilized for pricing the international varieties of oil, declined by a cent to $111.93 a barrel in London’s ICE Futures exchange.

Reports of the American Petroleum Institute trade group has informed that crude supplies in the US have increased by 2.4 million barrels in the past week, while the stocks of petrol have increased by 7.9 million barrels.

The figures indicated were much higher than those anticipated by the analysts who had forecasted an increase of 1.5 million barrels for crude oil and an increase of 2.6 million barrels in petrol stocks.

Jonathan Millet Chief Editor of ForexMinute.com

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