| Market Analysis Forex - 25 08 2011 |
 US stocks treading water ahead of Friday’s FOMC’ gathering’ with DJIA +0.86% at 11,269, the S&P Index -0.29% at 1,160.66. and the Nasdaq Composite Index -0.17% to 2,441.98. Brent Crude hovers near $109.34/bbl as supply disruptions balanced against demand worries. On Tuesday, API data showed a surprise 3.3m bpd decline in the week to Aug. 19th, against analyst forecasts for an 800,000 rise. USD/JPY reversed from its highs (76.88) following Japanese FinMin Noda’s press conference at which he announced measures to “deal with JPY’s rise”. Measures were limited to the setting up of a $100bn facility to encourage Japanese firms’ M&A activity and secure energy resources. The MoF seems to have taken a leaf out of the Swiss government’s book in that measures are aimed at making JPY strength more ‘tolerable’ and not turning it around. Banks borrowed €2.8bn at the ECB’s marginal lending facility today, up from €0.6bn yesterday. Although this might generally be seen as another sign of stress and liquidity starvation in the banking sector, EUR weakness was very short-lived and revered on news that no bank has tapped the ECB for 1-week USD liquidity via its swap lines ($500bn last week).Last trade at $1.4464, +34 pips on the day. Recently, the EURUSD had been trading at the upper-end of its month long trading range and analysts believed it would be vulnerable to selling pressure. Indeed, the popular Forex pair encountered resistance and fell below 1.4400. |
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