Forex Daily

The Indian central bank has closed its financial markets today (Thursday), as further attacks ravage Mumbai, the capital of India’s business sector. Although the markets will be closed, the Indian central bank has stated that it will still be making cash available for the interbank lending markets.

The Asian Chief Economist for private bank Credit Suisse said “Clearly, it will be negative for the sentiment towards India at this point of time, the time when the world is already looking to be highly uncertain in terms of its growth prospects,” after the Mumbai attacks.

The dollar fell even more on Friday, with the yen dropping from previous highs as global stocks steadily recovered reducing the demand for the US and Japanese currencies.

The dollar continued its slide as growing concerns over the US auto industry and data showing that US weekly jobs claims soared did little to boost confidence with investors.

With the fears of a global financial crisis and with many economies technically already in a recession, the Swiss National Bank surprised the market as it cut 1 percent off its interest rates, taking it to just 0.5%.

The yen saw a large rise on Wednesday, boosted by the growing concern of the US auto industry and as uncertainties in the global economy continue on the stock markets. The US auto firms including Ford, General Motors and Chrysler have warned US congress that the industry is in trouble, and are seeking billions of dollars from the government to help.

The yen was up 0.3 percent against the dollar and 0.5 percent up against the euro, as investors predicted further rate cuts in the UK and US. Both the Federal Reserve and the Bank of England are expected to release detail of their policy meetings later today, which will give some indication on how far and how quickly the rate might be cut again.

After rallying earlier in the week, the euro fell against both the dollar and yen as key European data showed that the euro zone was technically in a recession.

The figures showed that France had managed a small growth between July and September, but other key figures also showed that the euro zone was in a technical recession after German growth contracted for the second successive quarter.

Tuesday saw the euro rise against the dollar and yen as investors looked beyond the slip in share prices, and pushing the euro to near record highs against the weakening sterling, which has fallen sharply on fears over the UK economy continue.

In early trading the euro rose 0.4 percent against the dollar and sterling, pushing it to $1.2787 and 81.94 pence respectively. The euro was also up 0.2 percent against the yen, rising to 125.05 yen.

Investors are also anticipating key German data, which is due out today. The ZEW survey is widely expected to show that investor’s morale is still low this month, and will put pressure on the European Central Bank to keep cutting interest rates after a 0.5% cut to 3.25% last week.

The sterling rose against the euro on Thursday, and steadied from losses against the dollar as the Bank of England cut its interest rate by 1.5 percent. This was the biggest interest rate cut by the bank since 1981 and signals the bank’s concern over a UK recession.

The European Central Bank also cut its interest rates by 0.5%, taking it to 3.25%, meaning that UK rates are lower for the first time since 1999, when the euro currency was launched.

Wednesday saw the dollar rise against numerous currencies after a big fall yesterday, and as expected with the results of the US presidential elections over and Barack Obama’s decisive win to secure the presidency, investors turned their attention back to the currency markets.

The dollar was up to $1.2840 against the euro in the early session, over a percent higher than yesterday with investors cautious as both the Bank of England and the Central European Bank expected to cut interest rates tomorrow.

After a steady week last week, Tuesday saw the USD fall slightly against the yen and euro, as investors keep an eye on the presidential election. Analysts are also anticipating an interest rate cut in the UK.

Trading on the markets has been cautious, but the Australian dollar regained some losses after the Reserve Bank of Australia provided another rate cut as it looked to steady its economy.

The US dollar fell around 0.2 percent against both the euro and yen in the session, with the euro up to $1.2670 and the dollar down to 98.86 against the yen.