Gecko Global Analytics

Syd 21:40 GMT June 7, 2012
Forex: USD holds scope to weaken further - BBH: Reply
(San Francisco) - The U.S. dollar lost ground against its major trading counterparts over the past week, save yen, driven in part by positive developments in the euro zone, extended positioning and technical pressures.

EUR/USD has recovered all of the previous week’s losses, having climbed to as high as 1.2624 from an earlier weekly low of 1.2385, last quoted up 1.4% as we near the end of the week at 1.2590.

GBP/USD has recovered nicely from its recent fall to 5-month lows below 1.5270, last at 1.5540 vs. 1.5360 past Friday.

The Australian and New Zealand dollars have both gained sharply on the dollar this week, with AUD/USD last quoted at 0.9915 vs. 0.9685 past Friday, while NZD/USD last trades at 0.7690 vs. 0.7530.

In the week ahead there is further scope for foreign currencies to rally against the dollar, as positioning adjustment continues, according to Brown Brothers Harriman.

“The corrective rally is likely to continue as long as the euro can hold the $1.25 level,” says BBH. “However, with the fundamental political and economic backdrop in the euro zone likely to remain poor, medium-term investors would be best advised to sell foreign currencies into rallies.”.

Latest Fix is in for Spain (FXA)

As bearish as I am on a Euro Zone fix, much less a Spanish fix, I can't help but feel that a can kick on Spain's bank bailout is in the cards find another reason to sell risk other than this mountainous problem of an undercapitalized banking system at least for the time being.