Dollar Demonstrates Mixed Week on Uncertainties

The US dollar posted a mixed week against the other currencies on Forex, as the investors didn’t seem to be certain of which direction to choose on worsening of the economic situation and intervention threats from Japan.

The dollar fell for a first week in three against the euro and declined for a second week against the Japanese yen. Against the Great Britain pound, the greenback managed to grow for a third week in a row but the gain was minimal this time. The poor macroeconomic releases from US that signaled about a slower recovery and pushed back the future interest rate hikes were the main drivers for the dollar bears this week.

The US dollar failed to gain against the Japanese yen even despite the expected currency intervention there, which has been a major news topic of the week. A slight increase against the GBP can be seen as the result of some moderaterisk-aversion seen this week. The analysts believe that if the next week we’ll continue seeing the same levels of pessimism in the fundamental reports in the United States, the dollar will continue going down against the majors.

EUR/USD rose from 1.2705 to 1.2760 after touching as low as 1.2588 this week. USD/JPY went down from 85.60 to 85.20, while the drop on GBP/USD was from 1.5538 to 1.5525.

Can Yen Profit from Economic Uncertainty?

The Japanese yen is considered a safe currency, which makes it attractive in the times of the economic instability, like nowadays. While its appreciation slowed compared to the beginning of this year, and it even weakened a little versus some other currencies during the summer, the yen remains very attractive currency for those who desire safety. Will it retain its value or it’s time to sell the currency while it’s still highly priced? The answer is hugely depends on the risk sentiment of the traders, which can be easily changed by any economic news.

The demand for a safe haven won’t likely to go away anytime soon. The news from the US, especially the slowdown of the manufacturing and the unexpected surge of the unemployment, fueled the fears of the double-dip recession. The data from Europe, while reduced the pessimism about Eurozone previously, wasn’t too encouraging either. Even the support from Asia, which is the main reason to be not overly pessimistic about the global economy these days, waned as China slowed its economic expansion. As we see, the necessity for a safety is undoubted.

The problem is that weaker global economy means weaker demand for exports, which may hurt the export-driven economy of Japan. And this may, in turn, weaken the Japanese currency. The economists estimated, before the government report on August 25th, that the exports expanded 21.8 percent in July from a year earlier, slower than in the previous month — 27.7 percent. Of course, the possibility of the intervention by the central bank also weights on the currency. The investors speculated that the intervention may be discussed on the meeting of Naoto Kan, the Prime Minister of Japan, with Masaaki Shirakawa, the Governor of the Bank of Japan. The meeting was delayed, though, and may be replaced by the telephone conference instead as the officials is concerned that the public opinion may consider that the government has too much influence on the central bank’s decisions. Nevertheless, Yoshihiko Noda, the Minister of Finance, said that he is going to meet with Kan and expressed the desire to cooperate closely with the central bank.

USD/JPY may remain in the range 85.00—86.20 for some time, unless a breakout will occur. The yen should rise to approximately 107.50 per euro before encountering a resistance. Against the pound the yen may encounter a resistance at 131.20 before rising further.

Japanese Yen Strengthens on Renewed Demand for Safety

The Japanese yen rose today as the renewed concerns that the recovery of the global economy is losing the traction fueled the demand for the safer assets.

The experts say that Federal Reserve is expected to increase its purchasing of the bonds as the US economy may weaken. The recent improvement of the sentiment on the global markets wasn’t strong enough to completely remove the concerns for the global economy. The yen also strengthened as the concerns, that the policy makes will intervene to limit the currency’s gains, eased.

The gains of the yen were limited, nevertheless, by the rally of the stocks. The Standard & Poor’s 500 Index gained 0.5 percent, following the previous decline.

USD/JPY traded at about 85.43 today as of 19:51 GMT after previously declined to 85.18. EUR/JPY traded at 109.89 after it reached the daily low of 109.58.

Russian Ruble Rises with Oil Prices

The Russian rose today after crude oil, the main source of the nation’s revenue, gained and as the exporters converted their foreign currency earnings into the Russian currency.

The Russian exporters exchanged their foreign currency earnings for the ruble to pay the taxes this week. The crude oil prices advanced 0.7 percent to $75.95 per barrel in New York. The oil prices gained as the concerns for the global economy eased somewhat, but the fears may return, pushing the prices down to $60 per barrel.

USD/RUB trade at 30.541 today as of 11:02 GMT after falling as low as 30.452.

Canadian Dollar Fall vs. Greenback to Three-Week Low

The Canadian dollar fell versus the greenback today to the lowest level since July 22nd after the Federal Reserve suggested that the US economy would grow with slower pace, reducing the appeal of the growth-linked currencies. The Canadian currency managed to outperform the euro.

The Standard & Poor’s 500 Index dropped 1.5 percent. Crude oil, Canada’s key export, fell 1.2 percent to $79.32 per barrel in New York. The Fed said yesterdaythat the US economic recovery would be “more modest”.

The markets still feel the impact of the yesterday’s Fed dovish statement. This are the bad times for the currencies tied to the economic growth. The loonie was particularly hit by the pessimism as Canada’s own economy showed the signs of the weakness previously.

USD/CAD jumped to 1.0446 from 1.0308 today as of 16:32 GMT after rising as high as 1.0473. EUR/CAD dropped from 1.3580 to about 1.3483.

Dollar Weakens for Sixth Week vs. Euro, Falls vs. Pound & Yen

The dollar extended its losses against the other currencies as the macroeconomic reports continue to suggest that the US recovery is fragile and the additional stimulus may be required.

On Monday, the good reports weren’t able to aid the currency much, but boosted it slightly against the yen. Next day pushed the dollar down with the disheartening figures. The unexpectedly good employment reports on Wednesday sparked the optimism, which were removed on Thursday and turned in the pessimism yesterday as the reports showed that everything not that good with the job market in the US.

The greenback showed the same trend against other major currencies: the continuous decline for the whole week, except for Wednesday, when the currency jumped. The dollar also rose versus the yen on Monday, albeit not much.

EUR/USD rose from 1.3061 to 1.3292, advancing for the sixth straight week. GBP/USD jumped from 1.5895 to 1.5965 after falling as low as 1.5839 this week. USD/JPY dropped from 85.84 to 85.39, following the decline to the weekly low level of 85.02.

Euro Falls vs. Dollar on Lower German Production

The euro fell vs. the dollar after the report showed that the industrial output in Germany declined and on the speculation that the conditions on the US labor market improved.

The German industrial production fell 0.6 percent in June, while the economists expected another month of the growth after the production expanded as much as 2.9 percent in May. The US non-farm payrolls expected to fall as the temporary census workers quit job, but the number of jobs, excluding the government workers, should increase.

EUR/USD traded at about 1.3172 as of 12:23 GMT after it opened 1.3188.