Goldman Under Fire as Germany and UK Begin Probes

The current Goldman scandal and the Greek aid package delay established a flight to safety that saw the USD and the JPY strengthen against other currencies. Greece must know decide if it can match the conditions set forth by the IMF in order to be granted aid. Greek officials must formally ask for the activation of the aid plan, and so far only a letter by Finance Minister Papaconstantinou is being considered as a prelude to an activation request.

The US$ is stronger in the O/N trading session. Currently it is higher against 14 of the most actively traded currencies in a ‘whippy’ trading range. The USD$ is higher against the EUR -0.14%, CHF -0.17%, GBP -0.50% and lower against JPY +0.09%. The commodity currencies are a lower this morning, CAD -0.27% and AUD -0.46%. The AUD appreciated 28% in the past 12 months but as global central banks are unwilling to increase rates and the threat of China revaluation (0.9176).

Forex heatmap

Crude is lower in the O/N session ($81.23 down -200c). The crude rally might be ending as OPEC members wishing to cash in have broken the agreed production quotas. This coupled with the lower demand for oil. OECD nations have decreased their demand 8% compared to 2006 numbers. US Dollar strength has put downward pressure on oil as the Greek tragedy has a new player in Goldman. The combination of US Dollar strength and US growth weakness paints a negative picture for crude demand.

Commodities prices could fall if the current Goldman debacle leads governments on a regulatory path that would limit trading . Gold would lose its alternative investment status if the dollar continues its rebound USD$ ($1,128). Platinum and palladium have outperformed Gold as jewelry demand and Chinese auto industry demand have picked up. Yuan revaluation is also expected to boost gold as its price would become more attractive to Chinese buyers of the metal.

The Nikkei closed at 10,90 down -193. The DAX index in Europe was at 6,159 down -21; the FTSE (UK) currently is 5,713 down -30 The early call for the open of key US indices is lower.

Note: Dean will be away traveling for the next two week’s and will return to publication on April 29th.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza