The dollar extended its loss against its major rivals today
on speculations that the Fed may continue to lower fed fund
rates in the rest of the year. The euro touched 1.41 versus
the dollar, while the yen strengthened to as low as 114
against the dollar.
The dollar index fell to an all-time low at 75.73
yesterday. Interest-rate futures pricing indicated traders
see an 80 percent chance that the Fed may cut a
quarter-percentage point to 4.50% on its policy meeting at
the end of October.
In the early session, US weekly jobless claims fell 9k to
311k, beating the estimate of 321k. Philadelphia Fed
business conditions index dropped from 0.4% to minus 0.6%
in August, below the estimate of minus 0.2%.
Fed Chairman Ben Bernanke today said in a congressional
hearing that subprime mortgage delinquencies are likely to
rise further, and the Fed is committed to prevent lending
problems. He added the market tends to self-correct over
time and subprime mortgage market has adjusting sharply. US
Treasury Secretary Henry Paulson said the Fed's move help
stabilize market credit crunch.
The dollar extended its loss after London's Daily Telegraph
newspaper cited that Saudi Arabia did not lower its
interest rates in line with the Fed, though King Abdullah's
advisor said the country will not unpeg its currency from
the dollar in the near future.
Advertisement CAD Reached Parity with USD
The Canadian dollar rallied sharply on rising commodity
prices. Crude oil surged to 83.46 dollars per barrel today.
The currency equaled the dollar for the first time since
November 1976. The market will pay attention to Canada
retail sales report due tomorrow. Canada retail sales are
expected to remain unchanged in July, after a 0.9% drop in
June. Excluding food and energy, core retail sales may rose
0.3% versus a 0.3% decline in the previous month.
EURUSD will face interim resistance at 1.40, followed by
1.4020 and 1.4050. Additional ceilings will emerge at
1.4080, backed by 1.41. Support starts at 1.3950, backed by
1.3930, 1.39 and 1.3880. Subsequent floors are eyed at
1.3850.
USDJPY encounters interim resistance at 114.70, backed by
115 and 115.30. Subsequent ceilings will emerge at 115.50,
followed by 115.80 and 116. On the downside, support begins
at 114.30 and 114, followed by 113.80. Additional floors
are eyed at 113.50, backed by 113 and 112.70.
GBPUSD encounters interim resistance at 2.01, backed by
2.0130 and 2.0170. Subsequent ceilings will emerge at 2.02,
followed by 2.0220 and 2.0250. On the downside, support
begins at 2.0050, followed by 2 and 1.9970. Additional
floors are eyed at 1.9930, backed by 1.99 and 1.9870.
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