SubscribeDaily Futures Commentary August 10, 2009
Monday, August 10, 2009
Since March 2009, the foreign currency markets have been driven by rising investor appetite for higher risk assets. On Friday, however, the stock market broke its correlation with the Dollar which could be a sign that investors are returning to a more fundamental outlook for the currency markets putting central bank activity back in the forefront.
Last week it was the activity of the Bank of England that primarily moved the foreign currency markets while the European Central Bank also displayed some influence. This week it will be the U.S. Federal Reserve.
On August 6th, the Bank of England shocked the foreign currency markets with an $84 billion increase in its quantitative easing program. This came as a surprise to many traders who believed that the economy was on the brink of stabilization. Pre-meeting surveys even showed that a growing contingent of analysts was looking for the BoE to at least announce a temporary end to the program.
This was not the case. however, as BoE officials felt that weak economic conditions along with tight credit were reasons enough to maintain the program in order to keep …
Read More …
Loading ...
