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Weekly Currency Roundup - The Pound Continues to Struggle

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Pound Sterling Over the course of last week the Pound experienced pretty extensive fluctuations. As the week began, disappointing UK industrial production figures and speculation surrounding Federal Reserve chairman Ben Bernanke’s announcement saw Sterling slide against the US Dollar and Euro.


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By Wednesday the Pound had fallen to a 3-year low against the ‘Greenback’ and multi-week lows against the Euro. However, after Bernanke disappointed easing expectations Sterling enjoyed a rebound against its broadly softening American rival. The Pound/Euro exchange rate was trading in a fairly narrow range for the latter half of the week, and by Friday Sterling had slipped against the US Dollar once more as UK construction data failed to impress and US speculation recovered momentum. The Pound began the week trading in the region of 1.4905 against the US Dollar and ends the week trading in the region of 1.5134

US Dollar

The ‘Greenback’ began the week in a bullish mood, supported by the release of a positive non-farm payrolls report before the weekend. Expectations surrounding Ben Bernanke’s announcement also bolstered the US Dollar and kept it trading higher against the Pound, Yen and Euro. Less-than-impressive news for the UK later saw the safe-haven US Dollar achieve a three-year high against its British counterpart. But gains were swiftly reversed as the likelihood of the Federal Reserve tapering stimulus in the months ahead declined. The US Dollar tumbled against the majority of its most traded rivals after Bernanke’s announcement and was also adversely affected by an unexpected rise in US initial jobless claims. However, before the close of local trade on Friday the US Dollar had returned to trading in the region of 66.06 pence against the Pound as domestic data caused the British currency to soften. The US Dollar began the week trading against the Euro in the region of 0.7783 and ends the week trading in the region of 0.7675

The Euro

With Eurozone Finance Ministers gathering in Brussels to discuss issues including the Greek bailout, movement in the common currency was limited as the week began, despite a report showing a dip in investor confidence in the Eurozone. As the first-half of the week progressed the news that Greece had been granted approval for its next aid instalment allowed the Euro to advance on the Pound. The shared currency was further supported a calming of political tensions in Portugal. Developments in the US saw the Euro soar back above 1.30 against the US Dollar while disappointing UK news pushed the EUR/GBP pairing close to a four-month high. However, a report showing that Greek unemployment had climbed, coupled with data detailing a decline in industrial output in the Eurozone, caused the Euro to falter in the following days. The Euro began the week trading in the region of 1.2850 against the US Dollar and ends the week trading in the region of 1.3050

Australian Dollar

The expectation of lacklustre domestic employment data kept the ‘Aussie’ trading within reaching distance of a three-year low against its American counterpart. The South Pacific asset was also trading lower against the Pound, but fought back on Tuesday in spite of concerning economic news from China and a survey of business conditions in Australia plummeting to an over four-year low. After the Federal Reserve implied that the US would need ‘accommodative’ easing to continue for some time to come the ‘Aussie’ bounded to a two-week high against the US Dollar, but movement against the Pound was limited as a result of an unexpected increase in Australia’s unemployment rate. As the weekend drew near investors began to look ahead to the publication of minutes from the Reserve Bank of Australia’s latest policy meeting and the South Pacific currency modestly softened against several of its peers. The Australian Dollar began the week trading against the US Dollar in the region of 0.9063 and closes the week trading in the region of 0.9157

New Zealand Dollar

A rise in New Zealand’s house prices pushed the ‘Kiwi’ higher against the Pound and US Dollar as the week began. The commodity-driven asset advanced further on Tuesday as domestic business confidence remained close to a three-year high and local retail card spending rose by more than forecast. ‘Kiwi’ gains were extended as New Zealand’s Finance Minister Bill English stated that rates will be increased when the time is right. Developments in the US also helped the New Zealand Dollar recover from recent lows against the ‘Greenback’. A domestic performance of manufacturing index, which showed that the sector continued to expand last month, also helped the ‘Kiwi’ hit a three-week high against the US Dollar before the end of the week. The New Zealand Dollar began the week trading in the region of 0.7867 and ended the week trading in the region of 0.7899

Canadian Dollar

The ‘Loonie’ was able to edge away from a two-year low against the US Dollar on Monday as industry experts forecast that Tuesday’s housing starts data would be positive. The Canadian Dollar was able to climb on several of its main rivals after Canadian building permits were shown to have unexpectedly surged by 4.5 per cent in May. As the week progressed, the ‘Loonie’ advanced on a bearish Pound and fluctuated against a volatile US Dollar. Positive Canadian housing starts figures and the expectation of US easing continuing for the foreseeable future pushed the CAD/GBP paring to a high of 0.6407 pence per Dollar and helped the Canadian Dollar claw its way to a three-week high against its US rival. Before local markets closed for the weekend the Canadian Dollar softened slightly against the US Dollar but was little changed against the Pound. The Canadian Dollar began the week trading against the US Dollar in the region of 0.9477 and ends the week trading in the region of 0.9623

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Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping clients understand market conditions and developing trends. Clients are wholly responsible for their own trading decisions.

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