Good morning from beautiful Hamburg and welcome to our Daily FX Report.
The EUR is approaching its highest level in almost 3 months on speculation that today's allotment of three-year loans to banks by the European Central Bank will fuel demand for the region's assets.
However, we wish you a great day and successful trading.
Market Review – Fundamental Perspective
The European Central Bank, which is based in Frankfurt, is expected to offer euro-region banks the amount of 470 billion euros in its longer-term refinancing operation, or LTRO. In its first operation on the 21st of December, it has lent a record sum of 489 billion euros. By using this
measure, banks are enabled to borrow from the ECB at around 1 percent and invest the proceeds in higher-yielding securities such as the 10-year Italian government bond, yielding at 5.35 percent.
The JPY lost versus 15 of 16 of its major currency peers on speculation that the European Central Bank's operation will lead to an increased demand of higher-yielding assets. In advance of Federal Reserve Chairman Ben S. Bernanke's today's testimony to the House Financial Services Committee, after saying on 25th of January that policy makers are keeping open the option to increase bond purchases to support growth, the USD was weakening versus the majority of its most traded counterparts.
The AUD rose to the highest level in one week after a report showed that consumer spending in the nation has increased. Retails sales have climbed the most in four months as a surge in spending in cafes and restaurants outweighed a decline in household goods purchases. According to the Bureau of Statistics, sales rose 0.3 percent in January compared to the
previous month, when it decreased by 0.1 percent.