Daily FX Wrap Up

After climbing to a top of 1.2558 on hawkish comments from the European Central Bank’s Klaus Liebscher, EUR/USD quickly fell to a low of 1.2500 in the wake of a worse-than-expected trade report. ECB’s Liebscher said the central bank would act to preempt second round effects, but also said he sees inflation risks from taxes, administrative prices and wages. Liebscher continued by saying that there is no reason to change market expectations, which implies that an expected rate hike could be made before the end of the year. Although the news was taken more harshly than expected the over all resolve of the Euro kept its loss to only 50 pips and showed a strong surge near the end of the trading day closing out at 1.2530.

Turning to the US dollar the final inflation report for September was issued by the labor Department this morning. Many traders were looking the dollar to loose ground and start a momentum trend but the dollar held fairly firm against the majors. Europe had its own negative news which counteracted a possible US Dollar fall-out. The Japanese Yen did not have a positive day by loosing ground against the Dollar. This may be a temporary retraction because the Yen is on a roll with positive inflation and economic growth reports from early in the week. XPRESSTRADE Analyst David Hilgeman