Easy Forex Daily Forex Report
Currency trading spans ended up somewhat tight on Tuesday as the market digested disappointing readings on UK public finances, a potential downgrade of Portugal and soft Canadian inflation statistics. The Swiss franc had been the top-performing G10 currency whereas the pound sterling appeared to be the laggard.
The over-all tone of trading was lackluster as liquidity begins to evaporate in advance of the holidays. The euro climbed early on in the period after Chinese Vice Premier Wang said China “has taken concrete action” to support Europe with its debt troubles although the trade later on corrected and EUR/USD dropped when Moody’s reported it may downgrade Portugal’s credit ranking. The announcement follows similar moves from other rating’s organizations but it led to a sharp EUR selloff.
Chinese representatives have apparently guaranteed to acquire 4-5 billion of Portuguese debt in early 2011 immediately after a visit there last week. The flight from the euro assisted to improve the Swiss franc to the top of the G10 complex. EUR/CHF in addition dropped to a fresh all-time low.
The Canadian dollar was in focus during the North American treatment due to critical reports on inflation and consumer spending. The main surprise had been a drop in November inflation to 2.0% year-over-year when compared to to the +2.4% prior and +2.2% expected. Inflation had lately ticked higher and that helped push USD/CAD to parity. That now seems to have been a statistical illusion with inflation anxieties now once again on the back burner.
Retail sales for October supplied a moderate lift for CAD right after it climbed 0.8% in contrast to the 0.5% anticipated. A substantial part of the outperformance was washed away by a revising in the September records to +0.4% from +0.6%.
Reports that the Federal Reserve and other central banks have extended swap lines was casually received by markets. The lines permit for simpler borrowing in the event of a money squeeze and are seen as a preventative solution. They were planned to terminate in January however the deadline has now been advanced to Aug. 1, 2011.
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