Weekly Currency Roundup – Positive week for USA sees Dollar strengthen

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Pound Sterling – At the start of the week the Pound saw little movement against its most traded peers, but did make gains against the US Dollar. The rise came after the Bank of England released data showing that lending to small UK firms hit a record high in June.

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Pound Sterling Continued……. On Tuesday the currency weakened against the Euro due to the release of surprisingly positive data out of the troubled Eurozone which showed that consumer and economic confidence rose in line with expectations.

Midweek the Pound fell to its weakest-level in more-than-four months against the Euro after economic data showed that shop prices in the UK declined for a third-consecutive month. It was also weighed down by investors taking a wait and see approach to the weeks Central Bank announcements.

At the end of the week Sterling fell to a two-week low against the Dollar capping a weekly loss against its American peer after the Bank of England maintained interest rates at the low level of 0.5%.

 

US Dollar

At the start of the week the ‘Greenback’ softened against the majority of its peers on a day which saw thin trading due to the annual summer lull. As the week progressed the Dollar strengthened against the Pound and made gains against the Euro after the latest US consumer confidence Index declined more than forecast in July as Americans grow pessimistic about the economy. According to the Conference Board’s index, sentiment fell to a reading of 80.3 from the revised 82.1 in the previous month.

Midweek the ‘Greenback’ made gains all of its peers after speculation increased that the Federal Reserve will reiterate its plans to reduce the pace of its quantitative easing programme. That view was supported after the Washington based Labor Department said that number of people making jobless claims fell to a 5-1/2 year low suggesting that the US jobs market is making an increasingly stronger recovery.

 

The Euro

At the start of the week the Euro spent the session little moved due to the absence of any important economic data releases. As the week progressed the Euro made gains against the Pound after data showed a third month of improvement to economic confidence in the Eurozone.

Midweek the single currency rose against the Pound after data showed that unemployment in the Eurozone fell for the first time in two years. The news gave investors added confidence that the region will soon officially exit its longest recession since 1995 and begin to grow.

As the week drew to a close the single currency weakened against the Pound and fell from a six-week high against the US Dollar after the European Central Bank decided to leave interest rates at a record low level of 0.5% following signs that the European economy is improving.

 

Australian Dollar

The ‘Aussie’ had a week of weakening against its peers as it fell against Sterling the US Dollar declining to its weakest level in three years on Tuesday following comments made by the Reserve Bank of Australia governor Glenn Stevens who said that the currency is likely to weaken further and laid open the possibility of interest rate cuts. This week also saw the Australian currency fall to a five-year low against the New Zealand Dollar. Also weighing upon the currency is speculation that the Reserve Bank of Australia will cut interest rates at next week’s policy meeting.

 

New Zealand Dollar

The ‘Kiwi’ also had a week of declines against the Pound and US Dollar but against its Australian relation the currency soared to multi year highs. Midweek the ‘Kiwi’ hit a five year high against the ‘Aussie’ today after the ANZ business outlook index rose from 50.1 to 52.8 – meaning that confidence among New Zealand companies is at a multi-year high as a result of building sector optimism.

 

Canadian Dollar

The ‘Loonie’ came close to a one-month high during Monday’s session as the value of Crude oil, Canada’s biggest export continued to trade over $100 per barrel. The currency also found support from expectations that GDP data due for release later in the week will show that the nation’s economy expanded by 0.3%.

Midweek the currency weakened against several of its most traded peers as lacklustre GDP data heightened concerns regarding the nation’s economic recovery. Wednesday’s GDP data showed that the Canadian economy only expanded by 0.2% in May, worse than the expected 0.3% being expected by economists.

At the end of the week all attention was diverted to the US as speculation continues to mount over whether the Federal Reserve will taper its monetary easing programme sooner rather than later. Any reduction will prove to be a detriment to commodity based currencies.

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