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.

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.

Canadian Dollar Impacted by Declining Commodities Demand

The Canadian dollar is having one of worst performances this week in more than 2 months as risk appetite is declining worldwide, affecting currencies that perform well on growing optimism.
The loonie has been influenced since the past week when Bank of Canada officials affirmed that a strong loonie could jeopardize the nation’s economic performance, and since then, a strong wave of risk aversion also affected stocks and commodities, assets which play a fundamental role to decide the loonie’s trends.
USD/CAD traded at 1.1053 as of 11:06 GMT from 1.1037 yesterday.

Canadian Dollar Pare Gains on Risk Aversion

In the end of this week’s session the Canadian dollar pared its previous gains as risk aversion rose this Friday, affecting U.S. stocks performance and also the crude oil, the main Canadian commodity exported to the United States, influencing the loonie’s outlook.
The Canadian currency rose 12 percent versus its U.S. counterpart this year, and since June, Bank of Canada officials are stressing on the fact that a very strong loonie may bring a negative impact to national exporters, and measures to be taken are not ruled out, if the loonie climb further. This month the Canadian currency has been one of the biggest losers versus its U.S. counterpart among the 16 most traded currencies in foreign-exchange markets, losing 1.3 percent as this week ended, which is certainly a favorable scenario for Canadian exporters.
The rally perceived in the beginning of the month which set the loonie to around 1.07 per U.S. dollar raised eyebrows in the Bank of Canada, considering that a stronger currency decreases competitiveness for one nation’s products, with statements regarding this fact already helping to prevent the rally to continue temporarily. It is unlikely that the loonie will rise further, as the national bank already announced that it will take measures to stop its climb, so a rather neutral or bearish trend can be expected for the Canadian currency in the short term.
USD/CAD closed this week at 1.0913 from a previous rate of 1.0863 on Thursday.

Poland’s Economic Outlook Provide Support for Zloty

The Polish currency extended last week’s gain this week as the Eastern European nation is showing one of the quickest recoveries in the region, increasing attractiveness for the zloty regionally.
After growing beyond economists expectations for the last quarter, Poland is being considering one of the most solid economies in the region, fact which is favorable for the zloty to gain versus several currencies, but mainly against the euro as the Polish currency suffered a severe devaluation during the worse moments of the global slump. The Polish currency climbed for a second week in a row on the country’s economic outlook.
EUR/PLN closed at 4.0923 from a previous rate of 4.1162 yesterday.

Yen Gains on New Tax Law

The Japanese currency extended its weekly gains today on speculations that Japanese investors are bringing overseas investments capital back to the country to profit from a new tax law, making the yen to climb further in an already pessimistic scenario.
Various factors provided support for the yen to gain for the third day in a row versus most of the 16 most traded currencies as today speculations indicated that last quarter’s GDP figures in the United States will indicate a deeper recession than in previous one, fact which is spurring demand for the relative safety of the Japanese currency. The pound also declined versus the yen as Japanese exporters are repatriating assets to the country to benefit from new tax regulations, even if the highest rise in home prices was posted today in the United Kingdom.
Analysts indicate that this week’s gains for the Japanese currency are very much related to new Chinese regulations approved in order to avoid further chaotic financial episodes in the country, but provoking side effects of pessimism in trading markets. Today’s quarterly U.S. GDP report is also causing market sentiment to have a bearish tone, since a longer recession in the U.S. would certainly rise risk aversion among traders, a yen positive factor.
GBP/JPY traded at 151.50 as of 10:46 GMT from a previous rate of 153.45 yesterday. EUR/JPY followed, from 134.51 to a current price of 133.52.

Pound Down on Chinese Comments

The U.K. currency posted losses today versus the euro and the greenback as stocks declined in the country and the Chinese Premier Wen Jiabao affirmed that the world economy is still facing a period of uncertainty, which brought risk aversion back in trading markets.
A reversal trend in equities markets pushed the British currency down and the MSCI World Index lost consistently mainly influenced by Asian stocks, who had a negative day after Chinese Premier Wen Jiabao made pessimist remarks towards the future of the world economy. The pound also lost consistently versus the euro as the Eurozone economy is showing signs of better economic performance than the British Isles, fact which is leaving room for speculations that interest rates will remain at record low levels set by the Bank of England this year.
p;Chinese declarations today affected the already faltering performance of the British currency, which is still declining as a consequence of BOE’s quantitative easing policies, which so far have been unable to rescue the U.K.’s economy from the worst recession in 60 years. The pound is likely to remain bearish unless the economy in the United Kingdom starts to show solid evidences of recovery, which haven’t been the case so far.
GBP/USD traded at 1.6372 as of 10:36 GMT from a intraday rate of 1.6494. EUR/GBP rose to 0.8728 from 0.8677.