is4profit Weekly Currency Report (22nd February 2013)
World currency market news for Friday the 22nd of February 2013
The Euro started the week close to a three-week low against the US Dollar due to the single currency remaining under pressure after last week’s economic data releases showed that the region’s recession deepened further in the fourth quarter of 2012.
Car sales across the European Union fell to its lowest ever level for a January, further weighing down the currency and continuing political concerns in the run up to the Italian election and the second round of voting for the Cypriot election didn’t help.
Midweek the Euro weakened to a six-week low against the US Dollar after minutes of the latest Federal Reserve policy meeting showed that some policy makers believe that the Fed may have to slow or stop its purchasing of bonds before it sees a pick-up in employment.
On Friday the Euro weakened below $1.32 for the first time in six-weeks due to an industry report showing that manufacturing and services across the Eurozone contracted at a faster pace than economists had been predicting. The Eurozone’s PMI fell to 47.3; economist had been predicting a reading of 49. The European Commission also slashed its forecasts for 2013.
A national holiday at the start of the week meant that the currency made little movement on Monday and Tuesday.
By midweek the US Dollar had gained against most of its major counterparts after minutes of the Federal Reserve’s January meeting showed that several policy makers advocated varying the pace of bond purchases. The currency was also aided by evidence that the recovery in the world’s largest economy is gathering pace.
On Friday it slowed its rate of strengthening, and weakened against the Pound and Euro. The safe-haven currency fell slightly against the Pound due to the release of better-than-expected economic data out of the UK. The Dollar was also dragged downwards after manufacturing in the Philadelphia region contracted, taking many economists by surprise.
On Monday the Pound fell to a six-and-a-half month low against the US Dollar as investors preferred the safety of the US currency.
It then weakened to a seven-month low against the US currency after Bank of England policy maker Martin Weale endorsed the currency’s fall, saying that it could boost UK exports. Against the Euro the Pound strengthened due to a series of disappointing economic data releases and political uncertainty in the single currency region.
Midweek the Pound weakened for a third-day against the Euro due to the market awaiting the release of the Bank of England’s minutes for February’s policy meeting. Against the US Dollar, Sterling is little changed.
The Pound fell sharply against the Euro and Dollar on Thursday after minutes from the Bank of England’s latest policy meeting showed growing support for more stimuli to boost the U.K.’s flagging economy. Against the US Dollar, Sterling slumped to a 31-month low and against the Euro it fell to its lowest level since October 2011.
The Yen continued its weakening pattern for most of the week after the G-20 refrained from criticising Japan’s monetary easing policies.
On Wednesday the Yen strengthened for the first time in three days against the US Dollar after one of Japan’s finance ministers said the government did not intend to buy foreign bonds.
By Friday the currency was back to its weakening trend.
On Monday the Aussie Dollar weakened to a two-year low against its New Zealand relation due to the markets awaiting the release of the latest Reserve Bank of Australia minutes and as expectations increased that the bank will lower borrowing costs.
The ‘Aussie’ extended its losses due to rising concerns that the US Central Bank will soon take steps to wind down the stimulus measures that have supported the world’s biggest economy. The currency could find support from the rising price of iron ore, Australia’s biggest export earner.
On Friday the currency rallied strongly after the nation’s Central Bank indicated that it might be done cutting interest rates for the foreseeable future. The Bank’s governor Glenn Stevens told the Australian parliament that the current interest rates were at the appropriate level and that they would remain at the current level.
The ‘Kiwi’ weakened against the majority of its peers after China’s quarantine administration destroyed three different brands of New Zealand produced milk powder. The act has raised new fears over the quality of the small nation’s biggest export after a recent scare over the presence of a benign chemical being found in a batch of the powder last month.
The currency weakened further after New Zealand Central Bank governor Graeme Wheeler said that he was ready to intervene in the foreign exchange markets in a bid to weaken the ‘Kiwi’. The comments have raised the prospect of a currency war after a number of nations ranging from Brazil to South Korea warned that their currencies were too strong.
The ‘Kiwi’ then tumbled, after Reserve Bank Governor Graeme Wheeler said that the currency was over-valued and reminded the market of his criteria for intervention. The ‘Kiwi’ was also weakened by a souring global mood for riskier assets.
The ‘Loonie’ fell against its US counterpart due to a decline in commodities and concerns that growth is stalling in the nation’s economy. The currency weakened as manufacturing sales fell to their lowest level since 2009.
The currency then weakened to its lowest level in seven-months against the US Dollar after policy makers in the USA try to avoid budget cuts, known as sequestration, which are due to begin next month. The currency was also weakened by a fall in Crude oil prices.
On Friday the currency remained trading at a seven-month low against the US Dollar due to weak commodity prices and a softening in the country’s economic growth. Lower prices for Canada’s biggest export, crude oil, and several other commodities weighed on the currency whilst recent economic data has pointed to slow economic activity.
This currency update is provided by TorFX – FSA Authorised Currency Brokerage. For more information and to request a free quote, visit www.torfx.com