FX Daily Wrap Up

The US Dollar had a tough day against most of the majors. The EUR/USD gained almost 85 pips to reach a high of 1.2989 in a steady climb. A possible fundamental reason was a speech by Treasury Secretary Henry Paulson on the US economy. Paulson first offered his views on President George Bush’s proposed $2.9 trillion budget for 2008, saying that the US is “transitioning from a period of above-trend growth to a more sustained level of above 3.0 percent.” This might have had direct reaction in the markets because of the above-average acceleration in the fourth quarter GDP, which topped out at 3.5 percent. The implied message was that the United States should expect a slower national growth to something far more sustainable. High growth times often produce drastic highs and lows with a large amount of uncertainty, often destabilizing an economy.

Looking to the Far East, the Japanese Yen did gain against the US Dollar today, but not nearly as much as the other majors. The main reason is that the Yen is currently trading at its lowest rate in four years. With the upcoming G-7 meeting, many analysts are expecting to see a bit of pressure placed on Japan to intervene and raise the rate of exchange for its currency. As we head into the evening session, the USD/JYP is currently trading at 120.09. David Hilgeman, XPRESSTRADE Analyst