is4profit Weekly Currency Roundup (14th) December 2012)
The Euro began the week at a two-week low against the Dollar and weak against the Pound due to concerns over Italy’s political landscape. The concerns stem from the current Prime Minister Mario Montis announcement that he wants to resign. Such a move would cause instability in the nation and could pave the way for a return of former leader Silvio Berlusconi. The Euro also dropped for a third-day against the Yen.
Midweek the currency strengthened against the Dollar due to a German report showing that investor confidence jumped in the region’s most powerful economy. The single currency rose against all but two of its 16 major counterparts.
The Euro continued to strengthen against most of its currency rivals following the agreement of European leaders to put the European Central Bank in charge of all Euro-area lenders. The deal is thought to be the first step in a unified banking union. The currency was also bolstered by better-than-expected economic data out of Germany and signs of progress in the ‘fiscal cliff’ negotiations.
The ‘Greenback’ retreated slightly after last week’s gains. The ongoing negotiations over the ‘fiscal cliff’ caused the currency to weaken against the majority of its peers.
President Barrack Obama and US Congressional leaders have been unable to progress in their talks and with time running out the markets are becoming increasingly nervous. As a result the Japanese Yen made gains at the Dollar’s expense as investors sought shelter in an alternative safe-haven currency.
The ‘Greenback’ took losses against the majority of its currency peers after the US Federal Reserve announced a fourth round of quantitative easing. Against the Japanese Yen the Dollar hit an eight-month high of 82.90 due to speculation that the Bank of Japan is likely to implement a new round of monetary easing in the very near future.
The Pound began the week at a two-week high against the Euro due to the German Central Bank cutting the German economy’s growth forecast. Concerns over the Italian election also dragged on the Euro.Against the Dollar the Pound fell as the ‘Greenback’ was supported by better-than-expected employment growth data and increasing bets that the US Federal Reserve will opt for a smaller stimulus package this week.
Midweek the Pound hit a six-week high against the US Dollar due to the US Federal Reserve implementing a further round of quantitative easing and the release of better-than-expected UK jobs data. Against the Euro the UK currency weakened slightly after European Leaders finalised a deal agreeing to the European Central Bank taking a more important regulatory role for the Eurozone.
On Friday the credit ratings group Standard & Poor lowered the UK’s AAA credit rating to negative from stable, citing weak economic growth and worsening debts as the cause. S&P’s move brought the U.K.’s rating outlook in line with Moody’s Investors Service and Fitch Ratings.
The Japanese Yen began the week up against the US Dollar as investors sought safe-havens due to the stalling ‘fiscal cliff’ negotiations. As more positive news began to emerge from Europe, China and the United States the currency grew rapidly weaker. Slumping to monthly lows against most of its peers. The main drag on the currency is the expectation that the current government will lose this weekend’s Japanese elections and be replaced by one that favours monetary easing policies.
The ‘Aussie’ fell from its two-month high against the Dollar after Chinese exports and imports failed to meet economist forecasts, impacting Australia’s trade prospects. The currency was also weakened by disappointing housing data. Against the Euro the ‘Aussie’ reached its highest level in three-weeks after former Italian Prime Minister Silvio Berlusconi announced his decision to take part in the upcoming Italian elections.
The currency went onto decline against all 16 of its major peers due to business confidence falling to its lowest level since 2009. The National Australia Bank said the confidence index dropped to -9 in November from -1 in October.
On Friday the ‘Aussie’ strengthened against most of its peers, hitting a nine-month high against the Yen. The currency’s increase comes after the Chinese released December’s manufacturing data.
New Zealand Dollar
The ‘Kiwi’ made gains due to the rising price of dairy goods and increasing confidence that China is recovering well. New Zealand’s largest dairy company Fonterra predicts it will see higher growth as extreme weather conditions around the world cut the supply of wheat and grain, which it expects will lead to higher dairy prices.
The currency then hit a nine-month high against the US Dollar and is close to breaching the 84 cents barrier. Some analysts are predicting that the ‘Kiwi’ could possibly reach as high as 90 cents by next year. It also hit a four-year high against the Japanese Yen and strengthened against its Australian neighbour. The rise came after the US Federal Reserve announced new monetary easing measures and the belief that a new Japanese government would implement a new aggressive monetary policy.
The ‘Loonie’ lost some ground against the US Dollar due to concerns about the US ‘fiscal cliff’. Last Friday the currency had been trading at a one-month high against its US counterpart, after both economies added more jobs than expected in November. Government data showed 59,300 new positions were created last month, the biggest number of jobs created in eight months. The jobless rate fell to 7.2%, its lowest level since June and down from 7.4%.
It then hit a seven-week high against the US Dollar as the government approved a multi-billion corporate takeover. The currency rose for a fifth day against the US Dollar and strengthened against all 16 of its major peers due to better-than-forecast factory data out of China signalling an increase in demand for Canadian commodities.
On Friday the ‘Loonie’ weakened from an eight-week high against the US Dollar after U.S. House Speaker John Boehner said President Barack Obama was willing to let the economy go over the so-called ‘fiscal cliff’ and into recession.
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