is4profit Weekly Currency Roundup (18th January 2013)
The weekly currency roundup brought to you by TorFX.
The Euro continued to strengthen this week due to positivity emerging from the single currency region. The European Central Banks decision to not cut interest rates also bolstered the Euro.
It then retreated against its safe-haven rivals after hitting an eleven-month high against the US Dollar and a twenty-month high against the Japanese Yen. The weakening came after the release of disappointing EU industrial data.
After a brief strengthening on Thursday against the US Dollar early in the day the Euro resumed its downward trend against the American currency. The weakening is thought to have stemmed from comments made by an EU finance minister who told the press that the Euro’s recent run of gains threatens to harm the regions’ export industry.
On Friday the Euro weakened considerably against the US Dollar, following the release of far better-than-expected US Unemployment Claims figures. Against the Pound the single currency continued to advance.
Against the Japanese Yen, the Dollar hit a new two-and-a-half year high as the Asian nation begins to implement additional monetary easing measures.
The ‘Greenback’ then strengthened against most of its currency rivals due to the release of worse-than-expected industrial production data from the Eurozone. The disappointing data led to an increase in demand for the safe-haven Dollar.
On Friday the Dollar made gains against the majority of its most traded peers due to the latest US Unemployment figures coming in at a five-year low. Its gains were limited however due to a disappointing manufacturing report.
This week the Pound slumped to a nine-and-a-half month low against a broadly stronger Euro as continuing concerns over the UK’s economic growth weighed on the currency. Sterling also weakened against the US Dollar as investors chose the safe-haven currency over the Pound.
The currency weakened against the majority of its peers after David Riley, the head of global sovereign ratings at the credit ratings agency Fitch, warned that the UK’s AAA rating is not assured.
Riley said that Chancellor George Osborne’s admission in last month’s autumn statement that he would miss his 2016 target date for public debt to start falling had been a "negative event" for the UK. He stressed that a downgrade of the AAA rating was not a "decided event" but warned that Britain remained vulnerable to fresh economic shocks elsewhere in the world.
So far this year the currency has dropped by 1.6%, making it the third worst performing currency after the Japanese Yen and Swiss Franc.
The Japanese Yen went into near freefall this week as the Bank of Japan prepares to begin its aggressive monetary easing measures. The currency fell to a four year low against the Australian and New Zealand Dollar, a two year low against the US Dollar and yearly lows against the Pound and other major currencies. The devaluation is part of the newly elected governments plan to kick-start the stuttering Japanese economy.
The ‘Aussie’ made gains against the US Dollar due to commodity prices rising to their highest levels in more-than-a-week. It then weakened after investors were left disappointed by a speech from US Federal Reserve Chairman Ben Bernanke. The markets had been hoping to hear more about the USA’s monetary easing and economic stimulus programmes. However, investors came away from the Federal Reserve chairman’s remarks with little new information.
The currency then weakened against most of its 16 major counterparts after the World Bank cut its global growth forecast for the year. It halved its forecast for Japan, cut the U.S. projection by half a percentage point and predicted a second year of contraction in the Euro region.
The ‘Aussie’ has hit its highest level in four years against the Japanese Yen. The Asian currency tumbled as investors predicted that the Bank of Japan’s policy makers will force the currency down further in a bid to kick-start the Japanese currency.
The ‘Kiwi’ made gains against most of its major peers as-well-as the Australian Dollar due to a report showing an increase in retail card spending. Statistics New Zealand said that the value of retail transactions on electronic cards increased 0.3 percent in December, its third-straight monthly advance.
The currency outperformed its Australian relation due to an increase in dairy prices. New Zealand’s most traded commodities saw their prices rise by 1.1%, building on a 2% gain achieved a week ago. Dairy prices have now risen more than 30% since mid-May.
The ‘Loonie’ advanced for a second week against the US Dollar as traders speculated that faster growth in China would result in greater demand for the nation’s commodity exports. The currency was also boosted by an increase in demand for riskier assets and a rise in the price of the nation’s biggest export of crude oil.
It then weakened against the US due to a fall in Canadian existing home sales and a contraction in the USA’s manufacturing sector. Against the Japanese Yen the currency weakened to a six-month low after the Japanese economy minister warned that the Asian currency was weakening too fast.
On Friday it rose from a two-week low against the US Dollar due to government data bolstering the growth prospects for the world’s biggest economy and Canada’s main trading partner. The currency was boosted by an increase in the price of crude oil.
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