Bad Week for US Currency

The US dollar performance was abysmal this week as concern about the slowdown of the US economic growth persists and even the good news weren’t able to weaken the fears. The dollar fell versus all other major currencies this month.

The manufacturing sector showed the signs of the weakness and the GDP slumped in the second quarter of 2010. It’s not surprising that the reports show that the consumer sentiment steadily declines. The Americans are also worried about their employment, despite the number of the jobless claims is decreasing.

In the environment of the uncertainty the Japanese yen thrives, rising against the dollar for the most part of the week. The Great Britain were rising for seven days, even on Wednesday, when it could go below opening level, but closed slightly above it. The euro fell on Friday, but overall the week was bullish for the 16-nation European currency.

EUR/USD rose to 1.3031 from 1.2893 this weak after reaching as high as 1.3106. GBP/USD went up form 1.5412 to 1.5689, while USD/JPY currency pair closed at 86.39 after opening at 87.54.

Bad Week for US Currency

The US dollar performance was abysmal this week as concern about the slowdown of the US economic growth persists and even the good news weren’t able to weaken the fears. The dollar fell versus all other major currencies this month.

The manufacturing sector showed the signs of the weakness and the GDP slumped in the second quarter of 2010. It’s not surprising that the reports show that the consumer sentiment steadily declines. The Americans are also worried about their employment, despite the number of the jobless claims is decreasing.

In the environment of the uncertainty the Japanese yen thrives, rising against the dollar for the most part of the week. The Great Britain were rising for seven days, even on Wednesday, when it could go below opening level, but closed slightly above it. The euro fell on Friday, but overall the week was bullish for the 16-nation European currency.

EUR/USD rose to 1.3031 from 1.2893 this weak after reaching as high as 1.3106. GBP/USD went up form 1.5412 to 1.5689, while USD/JPY currency pair closed at 86.39 after opening at 87.54.

Dollar Declines vs. Yen as Durable Goods Orders Unexpectedly Fell

The U.S. dollar fell today against the Japanese yen after the report today showed that the orders for the U.S. durable goods fell unexpectedly in June, fueling the concern for the economic recovery and spurring the investors to turn to the safety of Japan’s currency. The EUR/USD moves up and down today after it closed yesterday near its opening level.

Durable goods orders declined for the second consecutive month, falling by 1.0 percent in June after dropping 0.8 percent in May. The impact of this report was even more significant as the market participants anticipated the growth, not another month of decline. The unfavorable economic data outweighed the better than expected corporate earning, causing the Standard & Poor's 500 index drop by 0.5 percent. The Stoxx Europe 600 index was down 0.4 percent.

Ben Bernanke, the Chairman of the United States Federal Reserve said on July 21st that “the economic outlook remains unusually uncertain”. The data from the U.S. definitely added to the risk aversion sentiment on the markets, increasing the appeal of the yen.

USD/JPY traded near 87.67 as of 16:27 GMT today after opening at 87.90. EUR/USD near 1.2995 close to the opening level of 1.2996.

Dollar Weakens as Risk Sentiment Improves

The U.S. dollar weakened today as the new home sales surged in the U.S. and the corporate earning increased, improving the appetite for the risk among the investors. The greenback fell versus most of other major currencies.

The U.S.new home sales jumped in June to 330,000 (23.6 percent) from the revised May rate of 267,000. The U.S. house market was showing the awful values previously, and this improvement, while not unexpected, is much better than the economists hoped for. The Standard & Poors 500 Index rose 0.6 percent after jumping more than 3.5 percent in the previous week.

The improving risk sentiment spurred the investors to the riskier currencies, decreasing the appeal of the U.S. currency. The signs of rebound in Europe’s economy helped the euro to gain versus the greenback, while the Great Britain pound rose against the dollar after all major Britain’s banks passed the stress tests.

EUR/USD rose to 1.2997 as of 17:41 GMT today after it opened at 1.2887. GBP/USD reached the highest level in three months, climbing to 1.5490 from 1.5416. USD/JPY traded at 86.94 after it opened at 87.45 and jumped as high as 87.71.

by borrowisely.com

Bank of Canada Raises Rate, CAD Reacts Positively

The Canadian dollar rose against all major currencies after the country’s central bank decided to increase the target overnight rate to 3/4 percentage point on its meeting today.
The Bank of Canada announced in its statement that the interest rate is increased from 0.50 percent to 0.75 percent today. Although this decision has been expected by the majority of the market analysts, the resulting positive effect for the Canadian dollar was rather strong — it rose significantly against the U.S. dollar, the euro and the Japanese yen.
Despite the fact that the growth of the Canadian economy is slowing down, the analysts believe that the Bank of Canada may continue increasing the rates for some time, as the rate of growth of the economic output is still one of the biggest among the developed nations. Canada is now a leader by rate hikes among the G7 countries.
USD/CAD went down from 1.0545 to 1.0491 as of 17:15 GMT today. EUR/CAD dropped from 1.3654 to 1.3533, while CAD/JPY showed a growth from 82.25 to 83.11 today.

European Data Boosts Australian Dollar

Better than expected news from the Eurozone helped the Australian dollar to grow against all other major currencies today despite the pessimism expressed by the RBA yesterday.
The Aussie rose against the greenback to the highest level since mid-May (this year) and extended its gains against the euro. The currency also rose against the Japanese yen and its New Zealand counterpart. The Australian dollar has been falling yesterday on concerns about the European banks’ stress tests and the statements by the Reserve Bank of Australia.
The major moving factor for the AUD were reports on Purchasing Manager Index in manufacturing and services in Eurozone. Both reports demonstrated growth and the higher than expected values. Manufacturing PMI rose from 55.6 to 56.5 and Service PMI rose from 55.5 to 56.0.
AUD/USD rose from 0.8768 to 0.8939 as of 17:28 GMT today after going as high as 0.8951 earlier — the highest level since May 14. AUD/JPY increased from 76.25 to 77.78, while EUR/AUD fell from 1.4540 to 1.4430.

Near-Term Outlook for Decline of U.S. Dollar

The U.S. dollar was rising as the European crisis increased the demand for the safe currencies, but recently began to decline as the focus of the concerns turned to the U.S. themselves. While at the end of this week the greenback rebounded against some other major currencies, the future of the U.S. currency looks uncertain.
The dollar will likely weaken in the near future unless some good news from the U.S. prove the strength of the currency. The lower number of the jobless claims may spark some optimism, but other than that there is nothing to be hopeful about. In case the speculations that the European economy is stronger than it looks would prove true, the greenback will certainly fall further.
The moves of the EUR/USD currency pair can be expected to be volatile, as the sentiment shifts according to the news from Europe and the U.S. For now the shared European currency shows trend to rebound as there are more bad news from the U.S. than from Europe. On the other hand, the gains of the euro can be restrained by the uncertainty, brought to the global markets by the weakness of the U.S. economy. GBP/USD may experience some volatility too as the traders are uncertain yet what influence the budget cuts will have on Britain’s economy, so we should wait until picture becomes clear here to predict where the currency pair will go. The Japanese yen are likely to profit from the concerns about the U.S. and global economies and continue its rally against the greenback.
The dollar is nowhere near parity with the euro. It’s unlikely that greenback will go above 1.20 per euro in the near term. For now it hasn’t fallen far beyond 1.30 per euro level, but we should wait to determine if this would be the support level. Against the sterling the greenback wouldn’t probably weaken beyond 1.5475 per pound level and might trade near 1.5150 per pound. The dollar will likely be traded near the current level against the Aussie, while against the loonie it may rise to 1.0675 before dropping again.

Bank of Canada raises rates, sees recovery slowing

OTTAWA (Reuters) - The Bank of Canada raised its key interest rate on Tuesday, as expected, but warned the domestic and global recovery will be slower than it had previously forecast, suggesting any further hikes may be gradual.
The central bank became the first in the Group of Seven advanced economies last month to raise rates from the emergency lows introduced during the global financial crisis. It took a second step on Tuesday, lifting the rate 25 basis points to 0.75 percent.
Canada's blistering growth rate and job gains had led to widespread expectations of another rate hike, putting the Bank of Canada leagues ahead of the U.S. Federal Reserve and other G7 central banks, which are not yet ready to end the era of easy money.
But the hawkish stance on rates contrasted sharply with the dovish outlook in the accompanying statement, leaving markets in suspense about the bank's next move. It shaved its growth forecast for the Canadian economy this year to 3.5 percent from 3.7 percent and said Europe's bid to wrestle down sovereign debt would pinch the pace of the global rebound.
"Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments," the bank said in its announcement.
The lack of guidance on rates was identical to language used in its June 1 rate hike announcement.
In a Reuters poll conducted after the rate announcement, all 12 of Canada's primary securities dealers predicted another quarter-point increase on September 8 but most expected a pause in the tightening cycle in either October or December.
That puts Canada in the same basket as other commodity exporters such as Brazil, which is seen raising interest rates on Wednesday but pausing soon on signs that strong growth is cooling.

Dollar Falls as U.S. Economic Expansion Slows

The U.S. dollar fell today against the euro and the yen as the macroeconomic indicators suggested that the economic expansion in the U.S., while continues, is slowing its pace, curbing the appeal of the U.S. currency.
The Philadelphia Fed index fell from 8.0 in June to 5.1 in July, instead of the expected growth to 10.2, showing the slowdown of the manufacturing growth. The NY Empire State Manufacturing Index showed the same picture, dropping sharply to 5.1 in July from 19.6 in the previous month. The indicator showed that the conditions for the New York manufacturers improved in July, yet the pace of growth in business activity slowed substantially. And only the claims for the jobless benefits brought more pleasant news, falling more than expected to 429,000.
The analysts don’t look surprised by the dollar’s slump. With the depressing U.S. economic indicators the investors have no choice but to sell the dollar, looking for the more reliable currencies.
EUR/USD traded at 1.2911 as of 15:41 GMT today after opening at 1.2742. USD/JPY traded near 87.47, tumbling from its opening price of 88.49.

Canadian Dollar Goes Down on Concerns for U.S. Economy

The Canadian dollar weakened today after the economic growth in the U.S., the biggest Canada’s trading partner, showed the signs of the slowdown, possibly reducing demand for the Canadian exports. The Standard & Poor’s 500 Index went down 0.5 percent. The U.S. equities declined after the Federal Reserve Bank of Philadelphia’s index of the manufacturing activity slumped to 5.1 this month from the month before. The index still suggests growth, but has fallen for two consecutive months. Crude oil, the key export of Canada, dropped as much as 2.2 percent.
The Canadian dollars seems yet again to suffer from the outside influence, this time because of the close relations with the U.S. The meeting of the central bank’s policy makers, who would set the interest rates, scheduled on July 20th. The investors bet on 0.25 percentage point increase.
USD/CAD traded at 1.0378 as of 20:35 GMT today after it opened at 1.0324. EUR/CAD climbed to about 1.3432 from the opening rate of 1.3155.