Q 2 Reports Affect Currency Trading

Last week currency trading was largely affected by second quarter US corporate earnings reports. The stellar performance of Goldman Sachs, Intel and JP Morgan triggered a slight rise in risk sentiment among investors and currency traders. These results were followed by bad news from General Electric and Bank of America Corp. which dampened hopes of recovery.

‘Difficult Challenges Ahead’

Bank of America, the US’s largest bank. Said that net income fell by 25% during the second quarter and warned of further losses due to troubled loans for credit card, mortgage, and business customers affected by job losses and a weak economy. Bank of America Chief Executive Kenneth Lewis said. “Difficult challenges lie ahead from continued weakness in the global economy, rising unemployment and deteriorating credit quality that will affect our performance for the rest of the year and into 2010.”

Markets Lack Direction

Currency trading last week was somewhat volatile and many analysts said markets lacked direction. Mixed earnings reports caused investor caution lifting the dollar late in the week. Falling risk sentiment left many currency traders wary of higher yielding currencies like the Aussie dollar. Steven Butler of Toronto-based Scotia Capital said that the Euro’s failure to rise above the $1.41 lever reflected investor anxiety about the economy. Markets ignored euro zone trade data which showed a 1.9 billion euro surplus and also ignored the dollar positive comments by Japan’s top financial diplomat who said that the dollar would remain a core asset in Japan’s foreign currency reserves currently at $1 trillion dollars.

Next Week’s Economic Calendar

Factors likely to influence currency trading this week include June’s leading economic indicators due Monday, the weekly report on U.S. petroleum supplies due Wednesday, and weekly initial jobless claims and June’s existing home sales due Thursday. Speaking about last week Greg Salvaggio of Tempus Consulting said, “This has been a difficult market for forex traders.”