Retail Sales Report Affects Australian Dollar Performance

The Australian currency, which touched the highest level in one years versus its U.S. counterpart yesterday, fell as domestic reports indicated today that the country’s economic health is not as good as perceived by investors, mainly in the sales and real estate sectors.
After the Australian government published a report indicating that home loan approvals declined for the first time since the end of last year, the Aussie declined versus virtually all 16 main traded currencies, mainly versus its New Zealand counterpart as speculations indicate that the Reserve Bank of New Zealand will not cut further its national benchmark interest rate, raising attractiveness for the kiwi currency in the South Pacific and Asian regions. Australian retail sales also declined in August, making traders to be less confident towards interest rate hikes in the country before the end of the year.
The retail sales can be understood by traders as a reason for the Reserve Bank of Australia to postpone any projects of raising interest rates in the country, which is weighing negatively on the Aussie’s outlook. Even if today was rather negative for the Australian dollar, the overall forecast for the Aussie still remains very positive, as the country is proving itself more capable of recovering than most of the other world economic regions.
AUD/USD traded at 0.8595 as of 11:01 GMT after being traded at 0.8661 yesterday. AUD/JPY traded at 79.54 from 79.99.
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Dollar Rebounds as Stocks Fall

After a sharp decline yesterday due to increased risk appetite in stocks markets globally, the dollar rebounded today as speculations led traders to understand that the current gains in equities may not reflect the real potential of world economic and corporate growth.

The U.S. dollar rebounded slightly after being traded at the lowest level versus the European common currency yesterday this year, as a report showed that consumer prices in the bloc’s wealthiest country, Germany, declined in August in the yearly comparison, refreshing investors that the economic situation in Europe is still not as favorable as markets’ sentiment towards it. High-yielding currencies linked to commodities like the South African rand and the Australian dollar also declined after the price of metals declined worldwide. The greenback also gained versus Sweden’s krona, country which had its long term debt ratings downgraded by Moody’s Investors Service.

Two main reasons are behind the dollar’s rebound today. Firstly, a corrective movement can be perceived as traders profit from yesterday’s extensive rally in high-yielding currencies, and the current economic sentiment is not as optimist as it was some months ago, when a fast paced economic rebound was a consensus among traders for the future, proved false as still many economic regions around the world face a series of different problems.

EUR/USD traded at 1.4494 as of 9:58 GMT from a previous rate of 1.4433 yesterday. USD/CAD traded at 1.0806 after hitting 1.0690 yesterday.

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Australian Dollar Rises on G-20 Economic Stimulus

The Australian currency is trading near the highest levels in 2009 after the Group of 20 most influential countries in the world affirmed that stimulus will remain to rescue the global economy, attracting investors to higher-yielding options, like those of the South Pacific region.
The end of last week was very supportive for the Aussie to climb as the construction industry shrank at a lower pace and also jobs rose in the same sector for the first time in more than a year, helping the Australian currency to have one of the best performances as risk appetite brought investors back to higher yielding currencies. The New Zealand dollar also climbed as house prices in the country continued to rise, and both South Pacific currencies benefited from the G-20 statements indicating that further measures will stimulate the world economy, creating a bullish pattern in stocks and commodities that increased attractiveness for the Aussie even more.
Both international and domestic scenario favored the Australian dollar in the beginning of this week, helping the currency to reach almost the highest level this year, and it may climb further according to analysts. The economic stimulus provided by the G-20 is likely to increase confidence in trading markets, raising risk appetite and consequently favoring the Aussie.
AUD/USD traded at 0.8553 as of 10:41 GMT from a previous rate of 0.8521 yesterday when markets opened.
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Euro Climbs on Growing Optimism

The euro climbed versus a number of currencies in the start of this week as investors’ confidence rose in the region, providing support for speculations regarding the end of the recession in the countries using the European common currency.
This week started with pending to the side of risk appetite continuing market trends perceived in the end of last week, when the euro climbed fueled by renewed attractiveness as countries like Germany indicate significant positive economic improvements, suggesting that the recession may end sooner than expected in the Eurozone. Today, the euro is also gaining on speculations that a report regarding factory orders in Germany will show an expansion in July, if confirmed, it will be the fifth consecutive month with positive figures in this sector. Currencies like the yen and the dollar lost the most versus the euro, as traders leave safety attracted by yielding in emergent markets.
The euro is likely to have a positive week, mainly versus the yen, which could be overpriced after last week’s rally, but it will be difficult for the European common currency to climb very sharply, considering that even if the region is publishing several positive reports, most of the bloc’s members still face recession and complications in different sectors of the economy.
EUR/USD traded at 1.4342 as of 9:00 GMT from a previous rate of 1.4303 when markets opened yesterday. EUR/JPY climbed from 133.62 from 132.94.
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