is4profit Weekly Currency Roundup (16th November 2012)
As trade began on Monday the Euro proved unable to advance far beyond the low levels seen towards the end of last week.
A meeting of Eurozone Finance Ministers did little to boost the common currency on Tuesday and the Euro dropped notably against safe-haven rivals the US Dollar and Japanese Yen, posting an eight-week low against the former currency.
By Wednesday a worse-than-expected economic sentiment figure for Germany heightened concerns that the strongest economy in the Eurozone is weakening. Consequently, the Euro continued to trade lower against its contemporaries.
On Thursday the Euro was unable to benefit from better-than-expected third-quarter GDP figures for France and Italy as Eurozone third-quarter GDP declined by 0.1 per cent, sending the Eurozone back into recession for the second time in four years.
However, the concerning economic situation in the US pushed the Euro higher against its safe-haven rivals on Friday, helping it hit a two-week high against the Yen and a six-day high against the US Dollar. As trade continued the Euro was also able to benefit from reports indicating that the Greek debt situation will be resolved next week.
Eurozone concerns continued to dampen risk-appetite on Monday, allowing the US Dollar to hold Monday’s gains despite US markets being closed for a bank holiday.
Risk-aversion continued on Tuesday as a Greek bailout remained unsecured and Europe prepared for a series of anti-austerity strikes. However, demand for the ‘Greenback’ was tempered by a lack of US economic news.
On Wednesday US retail sales fell by more than expected and President Barack Obama stated that wealthier Americans would have to make higher tax payments no matter what fiscal arrangement was settled on. With Republicans opposed avoiding the fiscal cliff came into doubt.
Concerns regarding the affect the US fiscal cliff will have on global economic recovery made safe-haven assets more attractive on Thursday and the US Dollar continued to gain.
But on Friday the ‘Greenback’ broadly softened prior to this weekend’s discussion between President Barack Obama and Republican lawmakers regarding the fiscal cliff situation.
Sterling began the week trading lower against the Euro after hitting a five-week high against the common currency on Friday.
The Pound continued to fall on Monday, hitting a two-month low against the US Dollar.
As investors persisted in regarding UK economic recovery with caution Sterling stayed trading lower into Tuesday.
By Wednesday the Pound had increased less than 0.1 per cent against the ‘Greenback’ and as the day wore on the currency suffered a significant blow.
Bank of England Governor Mervyn King stressed that the UK economy is likely to shrink in the fourth-quarter, causing the Pound to tumble against several of its main competitors.
Over the course of Thursday Sterling continued its bearish trend following the release of data which showed a significant decline in UK retail sales.
On Friday Sterling snapped its run of losses against the Euro and gained by 0.3 per cent on its European rival. However, the Pound was still set for a third consecutive week of declines against the US Dollar.
As the week began Japan’s third-quarter GDP figures showed that the nation’s economy had shrunk by 0.9 per cent, the most rapid rate of contraction seen since April 2011. Bank of Japan Governor Masaaki Shirakawa then stated that the central bank would step up monetary easing.
The Yen had a week of ups and downs, declining significantly against the ‘Aussie’ and ‘Kiwi’ after the Japanese opposition leader pressed for limitless BoJ easing to stabilise the world’s third largest economy.
On Friday the Yen broadly firmed – advancing on all but one of its main rivals – but continued to head towards its sharpest weekly drop against the US Dollar since June.
The ‘Aussie’ began the week positively, bouncing back from three days of losses following speculative reports that interest rates won’t decline and a rise in Australian home-loan approvals.
However, by Tuesday the ‘Aussie’ had lost ground as a result of negative developments in the Eurozone. Statistics also revealed that Australian business confidence had slackened, pushing the currency lower.
On Wednesday a positive consumer confidence report helped the ‘Aussie’ climb to a week high against the US Dollar and an 8-week high against its New Zealand rival.
But the ‘Aussie’ dropped on Thursday after the Reserve Bank of Australia announced that it had increased sales of the currency in October to a range of buyers – including foreign central banks. Riskier currencies were also shunned in light of the Israeli air strike on the Gaza strip.
The Australian Dollar continued to fall on Friday, dropping to within 0.1 per cent of a three-week low against the ‘Greenback’ following comments made by the IMF in reference to Reserve Bank of Australia easing.
New Zealand Dollar
The New Zealand Dollar began the week on the up after China showed signs of economic recovery, enjoying a bullish relationship against the Euro, British Pound and US Dollar on Monday.
By Tuesday Greek uncertainty resulted in declining Asian equity markets and negative movement for the New Zealand Dollar, although disappointing Australian data did propel the ‘Kiwi’ higher against its South Pacific rival.
Tuesday’s gains against the ‘Aussie’ proved short lived as an unpredicted drop in New Zealand’s retail sales saw the currency plunge on Wednesday. This data, combined with the ramifications of anti-austerity protests in Europe, kept the New Zealand Dollar trading lower against several of its main peers.
The ‘Kiwi’ posted a significant decline against the ‘Greenback’ on Thursday after the global economic outlook suffered as a result of US fiscal cliff fears. However, the South Pacific currency was able to modestly rebound on its losses after New Zealand’s Performance of Manufacturing Index rose and Consumer Confidence improved.
By Friday the New Zealand Dollar had slipped slightly but movement was limited due to a lack of economic news.
Last week the Canadian Dollar sunk to a three-month low against its US rival. After rebounding slightly it began trading this week little changed.
By Tuesday Eurozone concerns ensured that the ‘Loonie’ was trading below parity with the ‘Greenback’ once more and on Wednesday the Canadian currency posted declines against the majority of its currency rivals after the federal budget announcement.
The Canadian Dollar’s bearish trend continued into Thursday after comments made by the US President put avoiding the fiscal cliff in doubt.
The ‘Loonie’ was set to post a weekly decline of around 1.2 US Cents but strengthened against its American counterpart on Friday after disappointing US developments. The Canadian Dollar climbed roughly 0.2 per cent against the US Dollar.
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