Dollar Climbs on Grim Economic Forecasts

The dollar kept its previous days trend gaining versus the euro and high-yielding currencies as forecasts suggest that loan defaults and unemployment rates will keep deteriorating, raising risk aversion and adding attractiveness for the safe profile of the greenback.
An expected rise in unemployment figures, and a still very complicated credit situation in the United States rose concerns among traders regarding the economic recovery in North America and consequently in a global dimension, slashing earlier gains this week for higher-yielding currencies and favoring currencies with a relative safe profile, as the U.S. dollar and the yen. The dollar is likely to end today’s session setting a second week of gains versus the euro, as the current strength of the Eurozone currency is already raising policy makers concerns, as it decreases competitiveness for European products and could slow down the economic rebound in the region.
A negative day in stocks and commodities while market sentiment impacted by U.S. employment figures and the Group of 7 meeting which may approach sensitive topics are providing support for the dollar tor remain strong in the short-term at least. If concerns regarding a strong euro be confirmed in the G-7 meeting, the dollar may extend gains versus the euro during the next week.
EUR/USD traded at 1.4543 as of 9:47 GMT from a previous rate of 1.4565 yesterday. USD/CAD traded at 1.0894 from 1.0747.

Brazilian Real Down on Trade Surplus Revision

Domestic and International events brought the Brazilian currency down today after touching the highest rate in one year last week, suffering the consequences of corrective movements in trading markets combined with a degree of pessimism.
The Brazilian real declined today after the trade surplus target was lowered by the country’s government, suggesting that the global economic situation is still influencing negatively on the demand for South American products, causing the real to lose almost 1 percent versus the greenback in the end of today’s session.
USD/BRL closed today’s session at 1.8143 from an opening price of 1.8093.

Canadian Dollar Declines Further on Commodities

The Canadian currency, highly linked to commodities and equities markets fluctuations declined today as corrective movements affected stocks globally, as optimism is not as significant as last week among investors.
The loonie, as often the Canadian currency is associated, declined extending losses of last week’s session end, when it declined from a one-year high versus the greenback on renewed global economic optimism. Bank of Canada officials mentioned multiple times that a strong loonie may jeopardize the national economic rebound, since the North American country economy is highly dependent on exports.
USD/CAD traded at 1.0780 as of 10:38 GMT, from a previous rate of 1.0695 yesterday.

Will the Pound Trade at 1-to-1 Versus the Euro?

The pound continued to decline today versus most of the 16 main traded currencies on concerns that Lloyds Plc financial conditions are far from being sustainable, increasing speculations that the British banking sector may delay an economic recovery in the country.
The U.S. dollar touched a two-weeks high versus the pound as the Lloyds Banking Group Plc affirmed that it may exit a government program to insure other positions, leaving room for suspicions that one of the main British banking groups is having a hard time to stabilize its accounts. The euro also gained versus the British currency, touching the 90 pence level for the first time in 5 months, as the Eurozone is providing traders with more solid evidences of recovery, raising attractiveness for the euro in the regional aspect. The yen also pared most of its losses versus the pound this week, as today, the demand for high-yield declined slightly.
The financial scenario in Great Britain still is far from optimistic, considering it was one of the countries with the most liberal policy towards loans before the crisis, facing the biggest issues when the credit crunch struck the world last year. Domestic problems and international optimism can lead the pound to lose further versus majors, and it is not impossible that, in the medium term, the pound will trade in equality to the euro.
EUR/GBP traded at 0.8987 as of 11:18 GMT from a previous rate of 0.8905 yesterday. GBP/USD traded at 1.6356 from 1.6537.

Dollar Suffers Another Hit as China Posts Industrial Growth

The dollar had a week of extremely negative performance hitting several record lows versus most of the main 16 currencies as demand for yield and investors’ confidence rose worldwide, this time, fueled by two reports in China that added to the already growing optimism in trading markets.
Today in Europe, the dollar extended its losses versus the euro as countries like Germany and France are raising attractiveness for assets in the region, as this countries are posting the quickest and most favorable news regarding economic improvements. The British pound also posted significant gains versus the U.S. currency hitting a one month high after producer prices in the United Kingdom climbed for a sixth straight month, suggesting that one of the countries that most suffered with the credit crunch in Europe may be already in a process of recovery, which upgraded the pound’s outlook.
Economists analyze with a certain degree of pessimism the current situation for the U.S. currency. The dollar has been hit massively this week by an outflow of capital towards higher-yielding options, and the sentiment regarding the greenback could not be worse, as most of analysts suggest that the dollar downtrend may proceed further to an undetermined period of time and level, as long as the economic recovery continues.
EUR/USD traded at 1.4591 as of 11:34 GMT from a previous rate of 1.4555 in the intraday comparison. GBP/USD touched 1.6735 from 1.6513.

Australian Dollar Rebounds on Chinese Data

The Australian dollar was affected yesterday by a series of negative domestic reports that halted a rally which set the currency to a one year high versus the greenback, but today, after favorable reports coming from Asia, the Aussie managed to reestablish its previous winning trend.
The Australian currency climbed today versus several lower-yielding trading options, as stocks surged in Asia benefiting from two reports in China which indicated a more-than-expected rise in the industrial output and increased new lending figures, suggesting that one of the main trading partners of the South Pacific region is recovering from the current crisis. The New Zealand dollar, normally associated to the Aussie’s movements since several factors affect both countries’ currencies, also climbed further, reaching the ninth week in a row of gains versus the greenback, raising concerns in the Reserve Bank of New Zealand that a strong currency may affect the country’s recovery.
According to analysts, the recovery in China is more than essential for Australia’s economy growth, since the Asian country is the main destination for Australian exports. After yesterday’s negative reports that led to speculations regarding a delay in interest rate hikes, the Aussie is once again bullish, indicating that optimism in the region remains strong.
AUD/USD traded at 0.8643 as of 10:56 GMT after bottoming at 0.8555 yesterday. EUR/AUD traded at 1.6896 from 1.6999.

Pound Climbs on Bank of England Strategic Changes

The pound reached the highest level in almost a month versus the U.S. dollar and gained versus the euro after Bank of England statements regarding its strategy to stimulate the faltering British economy revived investors’ confidence in the United Kingdom’s currency.
After the Bank of England officials’ declarations indicating that the asset-purchasing program will not be extended further, as it has been previously, the confidence towards the U.K.’s currency improved, as interest rates in the country also remained unchanged, helping traders to be more attracted to inject capital in the British Isles. The pound rose versus the euro, rebounding from a one-week low, and higher-yielding currencies also declined as a rally in stocks that lasted five days was halted as concerns regarding the Chinese economic recovery emerged.
Bank of England’s strategic change was not a consensus among analysts, since a significant amount of them bet on the extension of the asset-purchase program, which would be definitely weighing negatively on the pound’s outlook. Currently, the expectations towards an economic recovery in the U.K. are more optimist, since Eurozone countries like Germany, one of the main immediate U.K.’s trading partners is also rebounding, fact which could accelerate the process of recovering for the Northern European nation.
GBP/USD traded at 1.6623 as of 12:28 GMT from a previous rate of 1.6529 yesterday. EUR/GBP traded at 0.8755 from 0.8806.