Dollar extends drop to 5 Month low following FOMC minutes

[RTFX-Trading]

Dollar extends drop to 5 Month low following FOMC minutes

What?s New?
Switzerland: ZEW survey much higher than expected.
United Kingdom: No surprises from BoE minutes.
United States: Dollar falls to 2-month low against yen after FOMC minutes.
United States: Geithner optimistic about recovery of banks involved in ?stress test?.

Today:
09h00 France: Services PMI, exp 46.8, previous 46.5
09h00 France: Manufacturing PMI, exp 41.0, previous 40.1
09h30 Germany: Services PMI, exp 44.2, previous 43.8
09h30 Germany: Manufacturing PMI, exp 37.0, previous 35.4
10h00 Euro zone: Services PMI, exp 44.5, previous 43.8
10h00 Euro zone: Manufacturing PMI, exp 38.3, previous 36.7
10h30 United Kingdom: Retail Sales M/M April, exp 0.50%, previous 0.30%
14h30 United States: Initial Jobless Claims, exp 625?000, previous 637?000
14h30 Untied States: Counting Claims, exp 6.65M, previous 6.56M
16h00 United States: Philadelphia Fed index May, exp -18.0, previous -24.4

Overnight Rates & Indices:
EURUSD: 1.3809 ? 1.3757.
USDCHF: 1.1018 ? 1.0983.
GBPUSD: 1.5817 ? 1.5731.
EURJPY: 130.89 ? 129.91.
USDJPY: 94.98 ? 94.29
DowJones: 8?422 -0.62%.
NASDAQ: 1?727 -0.39%.
S&P 500: 903 -0.51%.
Nikkei: 9?233 -1.19%.
Gold: $942.15
Crude Oil: $61

Comments:

The US dollar fell to its lowest in 5 months against most major currencies, following the FOMC minutes. The Fed had considered buying more securities at their last policy meeting to spur recovery, after they lowered the forecast for US economic growth over the next few years.

The dollar also plunged after Treasury Secretary Geithner said the US financial system was ?starting to heal? thanks to the government bailout efforts. This sparked renewed enthusiasm for risk in other currencies by investors. Geithner also said how the banks have already announced $56B in recapitalization.

This morning the dollar is down 0.3% against the yen to 94.63, and eased to 1.3788 after reaching 1.3829 late on Wednesday. The Pound is now at 1.5786 after trading at 1.5817 against the dollar. My personal view is that the EURUSD will continue to rally towards 1.3880 areas, before a correction to 1.3730 ? 1.3750.

The Bank of Japan begins a two-day policy board meeting on Thursday. However, traders this is unlikely to have much impact because the central bank is widely expected to keep its interest rates near zero. From the US, investors will be looking at employment data later on today.

Good Day


Emman Xuereb
RTFX Ltd
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