is4profit Weekly Currency Roundup (11th January 2013)
Happy New Year to all is4profit’s currency roundup readers.
The Euro made gains against its safe-haven rivals at the end of last week after a better-than-expected jobs report out of the United States led to risk taking in the market.
It then weakened against the US Dollar due to speculation that the European Central Bank was preparing to lower the regions’ interest rates leading to risk aversion among investors.
Mid-week the Euro took moderate losses against its safe-haven rivals due to the news that the regions’ unemployment rate went up last month and Germany posted a decline in factory orders.
On Friday the Euro strengthened significantly after EU officials issued a statement saying that they expect economic growth in the region to improve, and that Eurozone interest rates would remain unchanged at 0.75%.
The safe-haven US Dollar took losses at the end of last Friday’s session due to a jobs report that showed a moderate improvement in the US economic recovery, leading to investors taking more risks.
The ‘Greenback’ showed little movement on Monday due to a lack of news and data releases. The currency increased against the Pound as investors opted for the safe haven currency after the markets were disappointed by the UK’s latest retail sales report.
On Friday, the US Dollar took losses against most of its higher-yielding currency rivals yesterday, Forecasts that the Eurozone is on its way back to economic recovery led to a round of risk taking in the markets.
The Pound weakened for a third day against the US Dollar on Monday, approaching its lowest level in a month. An industry report showed that UK retail sales slowed in December. Against the Euro, Sterling also weakened for a third day.
Midweek, the Pound fell close to a six-week low against the US Dollar due to speculation that the Bank of England could ease its monetary policy by as soon as today.
On Friday the Pound strengthened against the US Dollar after the Bank of England kept its monetary policy unchanged as expected. Against the Euro, the Pound weakened for a fifth day in a row due to the European Central Bank not giving any hint of a possible interest rate cut in the Eurozone.
The Bank of England said that its main interest rate would remain at the record low 0.5% for the foreseeable future.
The Japanese Yen has fallen to its lowest level since 2010 against the US Dollar and posted yearly losses against most of it main currency rivals. Newly elected Prime Minister Shinzo Abe has pressured the Japanese central bank to begin its measures designed to weaken the currency. Over the course of the next year the currency is likely to weaken further as the new government does what it can to stimulate the stalling Japanese economy.
The ‘Aussie’ strengthened against most of its major currency rivals on Monday due to the markets speculating that Japan would increase its spending to boost its economy. Against the New Zealand Dollar the Australian Dollar made gains ahead of the release of data that showed that building approvals and retail sales both increased in the bigger country. The Aussie was also aided by a 70% jump in the price of Iron Ore, Australia’s biggest export to China.
On Wednesday the currency hit a four-year high against the Japanese Yen and a three-week high against the US Dollar due to Chinese data showing that imports rose to a record level in the nation’s biggest trade partner.
On Friday the currency slid versus most of its 16 major counterparts after data showed inflation in China, the South Pacific nation’s biggest trading partner, quickened more-than-expected, and spurred concern that policy makers will struggle to balance price gains and growth.
This week the ‘Kiwi’ rose against all of its major peers after data showed that new building approvals for detached houses surged to its highest level in two years. Permits in New Zealand for dwellings excluding apartments rose 4.6% in November to 1,382, the most since May 2010, the country’s statistics office said.
At the end of the week, the NZ Dollar weakened against the Euro due to European Central Bank President Mario Draghi claiming that the Eurozone economy will show signs of a gradual recovery later in the year and signalled that the Bank would not be adjusting the ECB interest rates in the near future.
The Canadian Dollar posted its biggest gain against its North American neighbour in five months, last Friday, due to US employers adding almost twice the forecasted number of new jobs. The currency was up against the majority of its peers after being helped by the country’s unemployment rate falling to a four-year low in December.
On Tuesday the Canadian Dollar fell against the US Dollar for the first time in three days as global risk appetite declined. It wasn’t helped by a decline in the price of Canada’s biggest export – crude oil. A decline in the number of newly constructed homes also weighed down on the currency.
The ‘Loonie’ then hit a three-week high against the Euro due to speculation that the European Central Bank would maintain its record low interest rate level. ECB President Mario Draghi chose to maintain the bank’s rate target at 0.75%, where it’s been since July 2012.
The currency strengthened against the US Dollar as strong Chinese trade data improved risk sentiment in the markets. The commodity-sensitive currency gained as prices for oil and metals increased after data showed that China’s exports and imports grew substantially last month.
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