is4profit Weekly Currency Roundup (28th September 2012)
How has the Euro performed over the last seven days? How did the Pound fare against the Dollar? Is the Yen still safe? And what about Australian, Canadian and New Zealand Dollars, how are they doing?
Over the weekend the Pound came close to achieving a 13 month high against its US rival after UK borrowing data exceeded expectations but these gains were quickly offset as the American currency strengthened.
Sterling managed to maintain a bullish relationship with the Euro for most of the last seven days as lower-than-forecast economic data and Spanish/Greek concerns allowed it to advance against the common currency.
Although speculation over Chinese stimulus allowed the Pound to briefly gain on the US Dollar on Thursday, any advances were tempered as the European situation kept the relationship between investors and higher-risk assets uneasy.
As Friday drew closer the Pound received a boost following better-than-expected second quarter GDP data, and Sterling advanced on its American rival. It also benefited from the anticipated EU farm subsidies payments.
As the week opened the Euro’s rally was brought to an abrupt halt after news broke of discord between the leaders of the Eurozone’s two largest economies.
Following the release of disappointing German and French data recent gains for the common currency were reversed.
By Tuesday the Euro had declined against its US counterpart for the sixth consecutive day and by Wednesday it had hit its lowest level for nearly fourteen days.
Risk aversion strengthened as the week wore on as a result of uninspiring economic indicators and violent anti-austerity demonstrations in Madrid and Athens.
However, by Friday Spain’s pledge to meet its deficit target improved both the likelihood of the struggling nation seeking a bailout and confidence in the Euro. The common currency was able to rebound slightly following the Spanish announcement, but with disappointing Eurozone data expected next week any Euro advances may not last.
The US Dollar began the week little changed from Friday but quickly began to make gains against its major currency rivals.
Poor Eurozone data releases and positive US housing reports saw the ‘Greenback’ attract safe-haven seeking investors and the currency continued to advance on its peers.
By Thursday it appeared increasingly likely that China’s central bank would instigate stimulus measures. This benefited Asian stocks but reduced investor demand for safe-haven assets causing the ‘Cable’ to decline against its main counterparts for the first time this week.
The American currency’s dip was exacerbated by a string of disappointing US data releases. Improved prospects for a Spanish bailout also contributed to the ‘Greenback’ ending the 7 day period lower against its competitors than it began.
The Eurozone turmoil saw the Yen reaffirm its status as a safe-haven currency and it enjoyed a bullish relationship with its US counterpart for much of the week.
However, by the end of the week Japanese Finance Minister Jun Azumi warned that his successor will probably discuss the risks Japan is facing as a result of a strong Yen at next month’s Group of Seven finance meeting.
The ‘Aussie’ began in a state of decline after falling against its main trading partners.
By Tuesday encouraging developments in China led to a reversal of fortunes for the Australian currency. A rise in China’s leading economic index bolstered investor confidence and eased risk aversion, leaving the way clear for the Down-under Dollar to advance on its competitors.
However, the Australian Dollar’s bullish relationship with its rivals proved short lived and by the middle of the week further Eurozone troubles pushed it to a two-week-low against the US Dollar and close to a three-week-low against the Japanese Yen.
On Thursday the ‘Aussie’ continued its yo-yo week. An improved export outlook helped it to recoup some of its recent losses and rebound from a fortnight’s slump but its advance was halted when anti-austerity demonstrations in the Eurozone ushered investors towards safe-haven assets.
The Australian Dollar ended on a high as the currency was supported by positive developments in Spain. In light of recent movements analysts are forecasting the currency will advance 1.3 per cent from August.
New Zealand Dollar
The New Zealand Dollar began the week trading at the lower end of its forecast trading range of 81.80 to 84.30 US cents.
By Tuesday an unexpected decline in German business sentiment and continuing Eurozone uncertainty caused the ‘Kiwi’ to fall against the majority of its rivals.
The South Pacific currency experienced further declines on Wednesday after reports showed that New Zealand’s exports fell in August and its economy recorded its widest annual trade deficit since 2009. Despite this, an increase in Chinese exports left the ‘Kiwi’ largely unchanged by the close of trade.
Following a three-day run of declines the New Zealand Dollar was finally able to gain in local trading after the National Bank Business Outlook showed increasing optimism in local firms. The currency was helped on its way forward by stoked anticipation regarding Chinese stimulus.
Rallying Asian stocks helped the week end optimistically for the ‘Kiwi’ and analysts are confident that the currency could achieve a 4.3 per cent quarterly gain.
Last week was one of ups and downs for the Canadian Dollar and the volatility continued…
In light of Eurozone woes investors returned to the comfort of safe-haven currencies like the US Dollar and Japanese Yen, pushing the ‘Loonie’ into decline on Tuesday.
On Wednesday better-than-forecast Canadian retail sales and promising US data releases resulted in the Canadian Dollar enjoying a brief surge. However, it was soon pushed back after its US rival broadly firmed.
These declines continued on Thursday following violent anti-austerity turmoil in Europe and decreasing commodity prices. Not even news of improved Canadian consumer confidence could reverse the Canadian Dollar’s decline against the ‘Cable’.
The Canadian Dollar was also able to end the week positively after gold reached a seven month high and several US data releases came in below expectations. The ‘Loonie’ will likely fluctuate over the weekend following the release of Canadian GDP figures for July.
This currency update is provided by TorFX – FSA Authorised Currency Brokerage. For more information and to request a free quote, visit www.torfx.com