Dollar rebounds against euro

debt crisis.
The markets are still hopeful that a European resolution can be reached come October 23, 2011.
Earlier the euro rose to trade at US$1,3914 against the dollar but the euro lost some bit of momentum falling 0,7 percent to trade at US$1,3784 against the dollar.
Fundamentally the euro-dollar pair should be trading much lower and as a trader I would encourage a sell for any rally in the euro because neither debt reduction nor quantitative easing are working for the euro.
At the moment the euro seems to react to any headline risk in the Eurozone. The dollar index, which tracks the greenback against the currencies of its six trading partners, rebounded to trade at 77,00 from 76,96.
A positive economic data from the US on retail figures combined with a good earnings season pushed investors to higher ground in the dollar denominated assets.
The ECB has since announced that European banks need to prepare for their biggest write-downs in Greek debt and that Greek haircut could exceed 21 percent.
In London, Ernst and Young item club has cut UK economic growth forecast saying that it has stalled at a dangerous junction.
Last week the Bank of England injected US$115 billion as a stimulus package to boost growth and that affected the pound to the downside as investors’ exited pound denominated assets.
The pound declined to US$1,5776 against the dollar having gained to trade at US$1,5825 but lost momentum to trade at US$1,5776 to the dollar.
At the moment the pound seems to be stuck in ranges of between US$1,5825 and US$1,5770.
The euro-pound pair is swinging between gains and losses, the pound fell to 87.91 pence per euro losing 1,5 percent on poor economic data in the UK.
The Bank of England will again meet this week to discuss the prospects of quantitative easing. The pound was unchanged against the Swiss franc trading at 1,4125 per pound and fell to 121,30 against the yen.
The Swiss franc continues to be stuck in tight ranges against the euro between 1,2369 and 1,2357 against the euro.
Despite the debt crisis scenario the euro was little changed against the Swiss franc and was trading at 1,2369 from 1,2367 to the euro.
The Swiss declined by 0,1 percent against the dollar trading at 89,96 US cents from 90,02 US cents.
The Swiss National Bank continues to monitor any Swiss movement to the upside against the dollar, pound, yen and euro.
Headline risk in Europe has continued to affect exporting countries and exchange rates have been volatile.
Australian dollar had earlier rallied to US$1,0362 against the dollar on renewed hopes coming from Europe but lost steam after German officials said there is no quick solution to Europe’s debt problems.
The Aussie reversed earlier gains to trade at US$1,0267 to the dollar. With the Reserved Bank of Australia meeting insight concerning rate outlook that could put pressure on the Aussie dollar as well.
China could be another driver as it seeks to tighten their monetary policy damping demand for Australian exports to China.
South African market
The rand earlier had rallied to 7,789 to the dollar before retreating to 7,810 in Johannesburg. South Africa’s currency the rand retested those resistance levels before breaking out to trade at 7,766 to the dollar.
All those gains were wiped away as the rand fell to 7,9234 to the dollar as a false breakout was experienced earlier.
The markets are jittery at the moment and news coming from Europe about no quick solution to Europe’s debt woes sent the rand tumbling to 7,9234.
At the moment most of these commodity currencies like the rand are being hurt by events happening in Europe.
Europe is South Africa’s biggest trade partner as it accounts for 45 percent of their exports, the rand moves in tandem with the euro
Commodities
Crude oil declined to US$86,87 per barrel as political situations in the middle-east remains uncertain hampering crude surge.
Crude oil has slide by 20 percent between June and September 2011 due to bearish economies damping demand for crude oil.
Crude oil was facing resistance at US$87,99 before breaking out to trade at US$88,05 and further rallied to US$88,15 per barrel only to discover it was a false breakout and lost steam to decline by US$1,28 to trade at US$86,87 per barrel.
A gold rally was shattered by German officials’ announcement that it will take time to resolve Europe’s debt crisis.
Gold had earlier rallied to US$1 695,550 an ounce before retreating to US$1 685 an ounce as the news from Europe filtered through the markets.