Fx- Foreign Currency Exchange News: Thursday 1st December, 2011
The Central banks in a coordinated effort aimed at easing the strains in the financial market. The banks Bank of Canada, Bank of England, Bank of Japan, European Central Bank and the Federal Reserve and the Swiss National Bank all decided yesterday to cut the dollar rate swaps by 50 base points. The purpose of this action is to ease the strain in financial markets and this should thereby mitigate the effects of such strains on the supply of the credit to households and businesses.
Stocks are rising sharply this morning worldwide including Wall Street where the Dow Jones is up more than 3.5% whilst commodities are also recording important gains on the back of the global bank action, a cut in bank reserve requirements in China and better than expected economic date in the US.
The GBP/USD traded a broad range yesterday and was dipping to as far as 1.5525 and climbed to a fresh weekly high at 1.5778 a price which is just below the 50% retrenchment level of the 1.6164/1.5516 decline.
The USD/JPY is recovering from its rate cut fall of yesterday when it hit as low as 77.30 during the American session. At the time of writing the pair is quoted at 77.63.
The Central Bank rate cut pushed the EUR/GPB to a 0.8590 daily high. A volatile corrective movement pushed moved the pair to 0.8532 almost erasing its earlier gains. From that point demand has grown gradually especially during the Asian Session.
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