Yen Rebounds on Global Banking Situation Concerns

The yen rebounded versus a number of important currencies as concerns regarding an eventual recovery of banking institutions worldwide rose, consequently attracting investors once again to invest in the safety of the Japanese currency.
The Japanese currency had a positive perform today after the CIT Group Inc. statement indicating that the existing liquidity available will not be sufficient to pay maturing notes, increasing speculations that one of the most important commercial lenders in the world may file for bankruptcy. Emergent-markets like the South African, and commodity-linked countries like Australia, witnessed the sharpest falls in their currencies as investors became more risk averse today regarding the world banking situation. Speculations regarding the CIT Group have been lasting for over a week, halting a risk appetite rally sparked by corporate earnings in the United States, as long as CIT Group remains on the news with negative forecasts, it is likely that the yen will remain strong.
Analysts confirm that hopes for a blasting economic rebound have already cooled down. Even if an eventual economic recovery is on its way, it is likely that aftershocks coming from corporations that were deeply affected by the consequences of the global slump will push markets down, influencing directly the foreign-exchange trade.
GBP/JPY fell to 152.93 as of 9:55 GMT from 154.97 yesterday. AUD/JPY traded at 76.06 after reaching 77.10 yesterday

British Pound Weakens on House-Prices Decline Forecast

The British currency lost against most of the 6 main traded currencies as a government institution affirmed that the crisis in the real estate market will persist until 2012, shunning investors from pound-prices assets, and stopping last week’s rally versus the greenback and the yen.
The National Institute of Economic and Social Research affirmed today that the house prices slump in the United Kingdom will last until at least 2012, reflecting directly in Great Britain stock markets and the pound. Apart from the house-prices pessimistic overview, the very same instituted also stated that the national gross domestic product will be on the negative until the end of the year, and did not forecast a significant rebound for 2010. The British currency lost today versus the yen and the dollar today as the world financial scenario tends to deteriorate on concerns that the CIT Group Inc. may file for bankruptcy, attracting investors to refuge currencies like the Japanese one.
The prolonged negative situation in the British housing market is holding back investors’ confidence to allow the pound to gain in the foreign-exchange market. By the end of week, further events may add to the negative outlook, as the quarterly GDP is due to be published on Friday.
GBP/USD traded at 1.6367 as of 11:10 GMT from a previous rate of 1.6505. GBP/JPY traded at 153.04 from 156.15.
If you want to comment on the Great Britain pound’s recent action or have any questions regarding this currency, please, feel free to reply below.

U.S: A Long Way Out Of The Crisis

Inflation should remain subdued in the U.S. for now. Nevertheless, numbers might again rise in the medium term, along with commodity prices. The U.S. dollar, in the mean time, is testing recent lows, albeit a definite trend has yet to be discovered.
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U.S.: unemployment rate to grow?The economic grow is weak the United States with some areas improving better than others. The real estate market, as an example, has found a bottom at current levels, while the unemployment rate remains high and could increase in the future. Deleveraging is not over and small/medium size businesses are now under pressure. CIT group could not refund USD 1 billion in debt that will mature in August and the company should now accept USD 3 billion loans from bondholders to avoid bankruptcy. CIT¡¦s meltdown would have spread into the retail industry, since about 60% of the footwear and apparel products rely on the company. In effect, economic data remains inconsistent and fragmented. After having slumped 1.2% in May, industrial production declined only 0.4% in June (-0.7% expected). Nonetheless, capacity utilization printed 68.0%, which corresponds to the worst number in history. Retail sales rose 0.6% in June, versus May¡¦s gain of 0.5%, supported by the increase of 2.3% in auto sales. However, sales were up only 0.3% excluding motor vehicles. Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media. This article contains the following sections:
U.S.: unemployment rate to grow?
Europe: global trade still negative
EUR/USD: at resistance line

Greenback Drifts Lower on Shift to Risk

The dollar fell against the majors at the start of the week, sliding to a 6-week low against the euro at 1.4248 and a one-month low versus the Canadian dollar at 1.1023. The greenback came under pressure amid gains in the US stock market, which was prompted by news that troubled lender CIT would be bailed out by bond holders and thus avert bankruptcy. The economic calendar saw the release of the June leading economic indicators, which declined by less than expected to 0.7%, beating calls for a decline to 0.5% versus 1.2% in May. The data slated for release this week will see May home prices, weekly jobless claims, June home sales and the July University of Michigan consumer sentiment survey. The major fx pairs are likely to remain confined within range in the upcoming week with only a handful of reports slated for release. The key highlight will be Fed Chairman Bernanke’s Congressional testimony, which begins on Tuesday. Markets will be looking to Bernanke’s comments to Congress on how the FOMC will begin to rein in quantitative easing in order to quell nascent inflationary fears. This article contains the following sections:
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