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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Canadian Dollar Extend Gains on U.S. Optimism

The Canadian currency climbed even further before the end of this week’s session after optimism was renewed among traders with stocks and commodities climbing, After both Canada and the U.S. posted favorable reports regarding employment conditions.
After a report published in Ottawa indicating a rise of 27,100 jobs for the month of August in Canada, reverting July’s negative figures, the loonie was benefited as stocks in Toronto also rose considerably. This Friday, a U.S. report showing less than expected jobs cuts moved markets worldwide, creating bullish patterns in stocks around the world and influencing the crude oil rates, commodity which prices affect the Canadian currency directly, since the North American nation is one of the world top oil producers. The Canadian dollar had suffered since Bank of Canada officials stated that measures could be taken to weaken the currency, creating a bad sentiment for the currency, but the optimism is currently very strong, making an unstoppable bullish pattern for the loonie.
Analysts forecast that the Canadian dollar may rise to the levels previous to the national bank statements, when the greenback was trading at 1.0630, as long as optimism remains significant in equities and commodities markets, but it is hard to determine whether loonie’s bullish pattern will find support to extend its gains since the Bank of Canada already stated its position against a strong national currency.
USD/CAD closed the week at 1.0860 from 1.1039 on Thursday.
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Brazilian Real Benefit From U.S. Job report

The Brazilian report had a rebound towards the end of the week after U.S. employment conditions start to show small but essential signs of recovery, suggesting that one of Brazil’s most important trading partners is on the way out of recession.
After losing more than 5 percent in the end of the past week and in the beginning of the current one, Brazil’s real found support in renewed optimism as stocks improved and fewer jobs were cut in the U.S. in the month of August, suggesting that the world’s wealthiest country is recovery, which attracted investors to return to high-yielding options.
USD/BRL traded at 1.8555 as of 20:07 GMT from an opening rate of 1.8675.
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Swedish Krona Declines on Extended Loans

The Swedish currency declined today versus the euro and most of the 16 main traded currencies as the national central bank maintained interest rate in its historic record low of 0.25 percent leaving space for speculations that the country financial system is still facing a complicated situation.
The krona declined today versus several currencies after the Riksbank affirmed that it will offer more than $10 billion to Swedish bank to avoid the current banking crisis in the country, maintaining also the current interest rates at a record low of 0.25 percent, in order to stimulate credit and consumption to rescue the country’s economy from recession. The negative news for the Swedish currency also came with a statement from the nation’s central bank indicating that interest rates in the country will remain at extremely low levels through the next year, declining attractiveness for investors to beat in Swedish assets.
Even if the Swedish economy starts to give signs indicating that the worst moments are already behind, the situation remain very uncertain, and the expected maintenance of the rates at the record low level came together with an extremely dovish tone on Riksbank statement, shunning investors from Sweden and decreasing attractiveness for the krona, which may help Swedish products’ competitiveness, selling to markets at lower prices.
EUR/SEK traded at 10.2955 from 10.3550 in the intraday comparison.
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Euro Gains Before ECB Meeting

The euro rebounded today after a negative performance during the beginning of the week as speculations regarding the future of the Eurozone economy improved, indicating growth beyond previous forecasts, spurring the attractiveness for the euro today.
The European central bank will decide its current benchmark interest rates which are expected to be maintained at the same level, but optimism among traders indicate that ECB officials are likely to upgrade growth predictions for the Eurozone as the economy starts to improve slowly as seen in report during the past month. The euro also benefited from optimism in equities and commodities markets today, stopping a seven day decline versus the Japanese yen as investors returned to purchase riskier assets abandoning options in Japan. The euro also gained against some high-yielding currencies, on speculations that some countries like Germany, may rebound quicker from the recession.
The ECB metting today is going to provide support for the euro to gain, according to specialists. Previous reports published in July mainly regarding Germany and France are likely to be mentioned by the ECB as signs of recovery in the region, which will attract more investors to purchase euro-price assets. If the Eurozone continues to perform well, interest rates are likely to be hiked in the medium term future.
EUR/USD traded at 1.4325 as of 10:27 GMT from a previous rate of 1.4217 in the intraday. EUR/JPY traded at 132.34 from 131.66.
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Pound Declines on Disappointing Manufacturing Numbers

The pound declined today versus the most of 16 main traded currencies after a report in the country indicated that manufacturing production declined beyond economists expectations, adding pessimism concerning the recession length in the United Kingdom.

The United Kingdom has indicated through its latest economics reports that the current recession in the country can be considered more serious if compared to most of the main relevant economic regions around the world, declining appeal for the pound’s outlook, which traded today in the lowest level versus the euro in two months. Today, a manufacturing report published in Britain came below 50, indicating a contraction and going against expectations, sice most of economists were expecting a positive performance fueled by the to-be-confirmed economic revival in Europe. Following the pound’s decline, stocks in Britain also declined, indicating a flow of capital out of the British Isles.

Analysts evaluate the current fundamentals in the United Kingdom as negative factors weighing on the pound’s performance, since Bank of England’s policies are being unable to revive the nation’s economy, raising concerns that the recession will be longer and deeper in the U.K. than previous forecasts, which is certainly decreasing attractiveness for the British currency.

GBP/USD traded at 1.6214 as of 12:58 GMT from a previous rate of 1.6313 in the beginning of the day. EUR/GBP is in its highest rate in more than two months being traded at 0.8825.

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