Dollar Declines on IMF Statement | ForexGen

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The U.S. dollar declined today against other major currencies as the International Monetary Fund stated that there are still serious risks to the global financial market connected with the U.S. real estate crisis.

Most significantly dollar fell against euro, pound, yen and Australian dollar. Apart from the IMF statement, markets await the PPI report in U.S. today to show the moderate growth of prices, which will allow FOMC to further reduce the interest rates.

IMF still sees serious risks to global financial stability, while the dollar remains quite overvalued against some Asian currencies. Investing banks agree with this point of view as they think that the U.S. housing slump is still menacing the economic growth.

USD/JPY declined today from 104.33 to 103.77 as of 8:21 GMT. EUR/USD rose from 1.5519 to 1.5601- more than 0.5%, while GBP/USD went up from 1.9488 to 1.9566. AUD/USD reached a new 24-year high today on Forex — it went up from 0.9536 to 0.9599.

Chinese Yuan Rose on Dollar’s Decline | ForexGen Signals

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The Chinese yuan continued its record breaking growth against the U.S. dollar after a month-long pause today and rose to a new maximum level since the scrapping of the yuan-dollar peg in 2005.

China’s currency appreciated today as the U. S. Treasury Undersecretary David McCormick urged country’s authorities to further strengthen the yuan at a fast pace, while the U.S. dollar remained weak on Forex after a major downfall last Friday.

While it’s mostly certain that the yuan is going directly up against the dollar (and against euro and yen too), the question only remains as to how fast this appreciation will progress? Strong fundamentals, including tremendous current account and trade balance surplus, suggest for a safe and fast transfer to a more valued currency.

The U. S. dollar index, which measures the strength of dollar compared to dollar’s 6 most-traded counterparts, had its biggest daily drop last Friday. Asian currencies, including yuan, were among the most benefiting instruments during that decline.

The yuan rose today from its Friday close rate 6.9890 to 6.9820 as of 8:08 GMT in Shanghai. Currency strategists expect USD/CNY rate to devalue to at least 6.7 by the year’s end.

Asian Currencies Fell on High Oil Costs | ForexGen

The Asian currencies fell this week as the oil prices surged and the rising inflation concerns forced foreign investors to cut the inflow of liquidity into this region.

Indian rupee and Malaysian ringgit led the seven out of the ten most traded Asian currencies (excluding the Japanese yen) that dropped after the Federal Reserve representatives stated that the high inflation becomes a real challenge as the oil prices rose to the new historical maximum.

Recent macroeconomic reports from the regional countries show that the GDP growth may start slowing down there, while the inflation risks grow on the food and energy costs.

Reduction of the money flow supplied by the foreign investors is seen as one of the primary reasons for the Asian currencies’ downfall. Regional central banks can’t rise the interest rates to fight inflation, because doing so will put the output growth at risk.

The Indian rupee fell 2.2 percent over this week — to 42.51 per one U.S. dollar. Rupee is the third-worst performing currency out of the most-traded Asian currencies this year with an 8.2 percent decline. The Malaysian ringgit declined for 1.4 percent this week, while the Singapore dollar dropped 0.2 percent during the last five days — to S$1.3713 for one U.S. dollar.

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Yen Continues Growth after GDP Report |ForexGen

The Japanese yen continued its growth today after the late yesterday release of the GDP report showed that the gross domestic product rose much better than everyone expected.

Japan’s economy gained 0.8 percent in the first quarter of 2008 compared to the fourth quarter of 2007 and in a year-to-year comparison it expanded by the astonishing 3.3 percent as the exports to emerging markets helped growth during the global financial crisis.

The Q1 year-to-year growth appeared better than the median estimate of the market analysts, which forecasted a 2.5 percent growth. Meanwhile, the Q4 2007 year-to-year gain was revised from 3.5 percent to 2.6 percent.

Better GDP figures will probably determine further monetary decisions of the Bank of Japan. Current 0.5 percent interest rate will be probably left intact for some time and the future increases may be considered.

USD/JPY fell today for a second day — it went down from 104.69 to 104.23 as of 7:58 GMT. EUR/JPY also declined today — from 161.69 to 161.50. GBP/JPY fell from 203.92 to 203.07 today.

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Kiwi Falls Deeper on Bad Retail Sales | ForexGen News

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The New Zealand’s currency continued its extremely fast drop against the other major currencies today after the retail sales report was released yesterday at 22:45 GMT.

It was a third day of a bearish trend for the New Zealand dollar (at least against the U.S. dollar) as it continued the fall that’s lasting from mid March 2008 when kiwi (a nickname for NZD) reached its historical maximum against the greenback.

While the Australian dollar is still standing strong, especially against euro and pound, its «buddy-currency» is heading directly down. Many currency analysts are starting to talk about AUD and NZD decoupling that may be caused by the commodities boom, which are largely present in Australian economy and are insignificant in the New Zealand economy.

Retail sales fell 1.2 percent in New Zealand in March — the same value retail sales dropped in Q1 2008. They decreased 1.5% per head of population last quarter. Analysts expected only a minor fall in sales, so the reported values caused more bearish positions against the New Zealand dollar.

NZD/USD opened at 0.7613 today and declined to 0.7563 as of 8:50 GMT. During the same period NZD/JPY, one of the locomotives of the carry trade, fell from 79.89 to 79.27 on Forex.