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Currencies, USD Extends Gains, Aussie Weakens on China Growth Concerns

Posted by: : Paul EbelingPosted on: July 19, 2013 Currencies, USD Extends Gains, Aussie Weakens on China Growth Concerns
The USD edged higher against EUR Thursday as Mr. Bernanke delivered his semi-annual testimony before the US Senate Banking Committee where he stuck to the theme laid out previously Wednesday.
Mr. Bernanke said economic growth was moderate with solid signs of strength in various areas, a view supported by the Fed`s Beige Book report on regional economies, also released Wednesday.
The Fed’s Beige Book showed ‘modest to moderate’ growth in the US economy in recent weeks, while hiring held steady or increased in most Districts. Policy makers projected that growth would pick up in coming quarters, resulting in gradual progress toward the levels of unemployment and inflation consistent with the Fed’s statutory mandate.
The USD Index (DXY) extended gains Thursday to trade around 82.86 after opening at 82.79, having tapped a high of 83.05 and a low of 82.75.
The JPY fell for a 2nd day against most of its major peers on bets G-20 finance ministers and central bankers meeting later this week will include the Bank of Japan’s massive monetary easing policy that aims to stoke inflation to 2%.
USD/JPY pair is currently trading at ¥100.000 after recording high of ¥100.341, while the EUR/JPY pair noticed weak trades near ¥131.096.
Euro dropped for the second consecutive session, pressured by the rise in USD  and continuing political turmoil in Portugal.
Portugual’s ruling coalition parties resumed their talks with the opposition Socialist party Thursday, after the halt in negotiations, to come out with an agreement on terms of the country’s bailout program.
Greece`s parliament scraped through a vote that gives the “Green Light” for the country’s next disbursement of international aid. Out of 293 lawmakers present, 153 voted just after midnight to sack thousands more public sector workers in order to secure the next tranche of the EUR 7-B in aid.
German Finance Minister Wolfgang Schaeuble, will offer Greece EUR 100-M to promote economic growth in a move unlikely to appease protesters who resent his firm stance on austerity measures.
The EUR declined to trade around 1.31098, after opening at 1.31243, pushing the pair up to record a low of 1.30906, and a high of 1.31269.
The GBP rose Thursday, extending gains after the Bank of England (BOE) released the minutes of the 1st meeting led by Governor Mark Carney. The minutes showed that the Monetary Policy Committee was unanimous in leaving the central bank’s policy interest rate and QE program unchanged.
The GBP rose against the USD to 1.52305 after opening at 1.52097. The trading range for today is among key support at 1.4910 and Key resistance at 1.5380.
Slowing growth in China, the world`s biggest consumer of base metals, has triggered a broad the Australian Dollar after data this week showed that China`s economy slowed for a second straight quarter this year, down to 7.5% compared to 7.7% in the 1st 3 months.
Adding to growth concers, the International Monetary Fund (IMF) noted that risks are increasing for Chinese economic growth this year, according to the annual report on the Chinese economy. The IMF warned that policy makers must address imbalances in the economy to avoid more shocks.
The higher-yielding AUD fell to trade at 0.91804 Vs the USD after the pair started Thursday’s session at 0.92369.

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Paul Ebeling

Pattern Recognition Analyst, equities, commodities, forex
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations. Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.

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