UK Pound Down Against US Dollar, But Higher Against Euro

UK pound is down against the US dollar today, but higher against the euro. Once again, the interesting place the UK pound finds itself in is contributing to its mixed performance. The pound is heading lower against the US dollar as risk appetite dissipates, and higher against the euro as the pound represents a European safe haven.


Even after Egan-Jones Rating Company downgraded the UK pound to AA- from AA, the sterling is still higher against the euro in Forex trading. Pound is considered more stable than the 17-nation euro right now, thanks to all the uncertainty in the eurozone regarding what’s next for various countries, and the fact that there is still no solution being presented by eurozone leaders.

Against the US dollar, pound is lower, though. Risk appetite is once again a little scarce. However, there are some hopes from the upcoming G-7 conference call. It doesn’t look as though markets will be in full retreat today, but things are tilted a little lower today with some of the general risk aversion.

At 12:03 GMT GBP/USD is at 1.5339, down from the open at 1.5384. EUR/GBP is lower at 0.8094, down from the open at 0.8125. GBP/JPY is also lower, down to 120.0315 from the open at 120.5150.

Ringgit Falls as China’s Growth & US Recovery Slows

The Russian ruble advanced today for the second day as the nation’s central bank stepped up to support the currency and crude oil, the main Russia’s export, rebounded after reaching a lowest level in more than a year.

The Bank Rossii (Russia’s central bank) boosted its sales of foreign currencies to $250 million to $300 million yesterday as a measure to support the ruble. Brent crude oil gained yesterday after reaching the lowest level since January 2011, but retreated today. The MSCI Emerging Markets Index of equities rose 0.3 percent on hopes that global economic growth will pick up momentum.

USD/RUB fell from 33.4620 to 33.1880 as of 11:12 GMT today.

Ringgit Falls as China’s Growth & US Recovery Slows

Asian currencies, the Malaysian ringgit among them, were down today as negative data from China on the weekend followed poor macroeconomic reports from the United States on Friday.

China’s Purchasing Manufacturing Index fell to 55.2 in May from 56.1 in April. The report followed Friday’s US non-farm payrolls that showed employment growing by just 69,000. The data signaled that global economic recovery is slowing and that had a negative impact on assets of emerging economies. The MSCI Asia-Pacific Index of stocks fell for a fourth session.

USD/MYR rose from 3.1961 to 3.2018 as of 14:18 GMT today.

Euro Rebounds, Is Rally Sustainable?

 June 04th, 2012 at 13:44  11

The rebounded today, posting the second day of gains, but sustainability of the rally is highly questionable. Earlier, the currency declined as European leaders struggled to find a solution for the debt problems of the European Union.

Concerns about the potential breakup of the eurozone grow as politicians cannot provide anything that resembles a meaningful plat to contain the crisis. Germany still objects implementation of joint euro-bonds, arguing that it would not help to resolve the issues. Such indecisiveness may cost Europe dearly as Spain is likely to request a bailout, but the sheer size its economy means that it would be much harder (compared to Greece) to rescue the country.

EUR/USD climbed from 1.2415 to 1.2484 as of 13:44 GMT today, following the earlier decline to 1.2385. EUR/JPY was up from 96.95 to 97.58.

EUR/USD Breaks 1.26 Level, Traders Running from Euro

The euro fell below the 1.26 level against the US dollar, reaching lowest level since July 2010. That level was considered to provide strong support to the shared 17-nation currency and, now that the support line is broken, traders are afraid that the currency would spiral down to even lower price.

The members of the European Union are meeting at summit today, but most analysts and traders are pessimistic about the outcome of the meeting. Germany still rejects the implementation of eurobonds even as other countries, including France, support the idea. Herman Van Rompuy, President of the European Council, claimed that the European financial crisis will be discussed at tonight’s meeting in Brussels only “at the very end”.

The Bundesbank stated that a Greek exit “would be significant but manageable within the help of cautious crisis management”. Indeed, some experts say that both the eurozone and Greece would be better if the indebted country will leave the currency union. Others argue that an exit of any country would create a precedent, which may lead to quick dissolution of the euro-area.

EUR/USD sank from 1.2686 to 1.2562 as of 16:48 GMT today. Earlier, some technical analysts claimed that the currency pair should bounce after reaching the 1.26 level, but now it does not look likely. The daily minimum was 1.2544 — the lowest since July 13, 2010. EUR/JPY slid from 101.39 to 99.67, reaching 99.52 intraday — the low not seen since February 1.

Rand Slides to This Year’s Low as CPI Below Expectations

The South African rand slumped against the US dollar today to the lowest level this year as slower-than-expected growth of consumer prices triggered speculations that the nation’s central bank would refrain from raising interest rates.

South Africa’s inflations accelerated to 6.1 percent in April from 6 percent in March. That was the first increase in three months, which is not bad, but still below analysts’ expectations of 6.2 percent growth. The worse-than-expected data prompted speculation that the South African Reserve Bank would keep its key rate at 5.5 percent tomorrow.

USD/ZAR climbed from 8.3180 to 8.4450 as of 14:53 GMT today, while the daily high of 8.4590 was the highest since November 25.

Euro Tanks as Greece Exit Considered More Likely

Euro is tanking today, heading lower as speculation about a Greek exit of the eurozone increases. Indeed, some think that there is a real threat for Greek withdrawal — and that such a withdrawal could prompt a domino effect that includes Spain and Italy later. Worries about what’s next for the eurozone are sending the 17-nation currency down across the board.


Recently, former Greek Prime Minister Lucas Papademos insisted that a Greek withdrawal from the eurozone is a very real threat, even as he tried to encourage Greek citizens to accept painful austerity measures. Concerns that Greece will be unable to remain in the eurozone are on the rise. Worries are triggering fears of a domino effect as well. Once the first country leaves the eurozone, it becomes easier for other countries to bail as well, and Spain and Italy are considered prime contenders for the spots as the next dominoes to fall.

For now, the main fear is a flight from deposits at banks in countries affected by the sovereign debt crisis. A fight over eurobonds, as well as other aspects of a growth package for the eurozone is being set up, as there are expected to be very big differences between the approach of new French President Francois Hollande and the German Chancellor Angela Merkel.

At 14:03 GMT EUR/USD is down to 1.2645 from the open at 1.2684. EUR/GBP is down to 0.8042 from the open at 0.8049. EUR/JPY is down to 100.4185 from the open at 101.4300.

Bank of Japan Inaction Helps Yen

The Bank of Japan decided against taking any more action to ease at this time, and that is helping the Japanese yen. Forex traders had been expecting the Bank of Japan to ease further, in an attempt to keep the yen weak, but the BOJ offered something of a surprise following the recent downgrade by Fitch.

Citing faster economic growth, Bank of Japan officials decided to forgo additional easing measures during the most recent BOJ policy meeting. Leaders insist that public investment has increased, along with private consumption. This situation has resulted in the BOJ deciding that further easing in an attempt to stimulate the economy is not needed.

Without the specter of more easing (at least for now), Forex traders feel a little more confident about buying the yen. The yen has strengthened against its major counterparts since the announcement. Even the Fitch downgrade didn’t do much to really slow the yen — especially against struggling European currencies. Now, with the yen back in the good graces of the Forex community, there is a chance that it will become popular as a safe haven currency again.

At 13:04 GMT USD/JPY is lower at 74.4760, down from the open at 1.5761. EUR/JPY is down to 100.7045 from the open at 101.4300. GBP/JPY is down to 125.0750 from the open at 126.0100.

Pound Falls as CPI & HPI Drop

The Great Britain pound fell against the US dollar today after reports showed that inflation slowed and house prices unexpectedly declined, adding incentive for the Bank of England to stimulate the economy. The currency advanced against the euro after four days of losses. The consumer price index was 3.0 percent in April on an annual basis, down from 3.5 percent in the month before. The house price index fell 0.4 percent in March from a year ago, compared to the expected increase by 0.5 percent and the February growth by 1.0 percent. The index declined 0.6 percent on a monthly basis. The International Monetary Fund recommended the BoE to add stimulus for the UK economy. GBP/USD was down from 1.5827 to 1.5779 as of 13:13 GMT today. EUR/GBP dropped from 0.8094 to 0.8084.

Canadian Dollar Drops Against US Dollar on Risk Aversion

Risk aversion is the Forex market driver today, thanks to the Fitch downgrade of Japan. Even though equities aren’t being much affected by the latest news, currencies are. High beta currencies like the Canadian dollar are dropping, thanks to a desire for safe haven. Loonie is headed lower against the US dollar today, even though its own credit rating is remains solid. Canada retains the highest credit rating with all the agencies, but that isn’t helping the Canadian dollar today on the Forex market. The Japan downgrade has shaken things up a bit, and the US dollar is gaining against the loonie today. However, even though the Canadian dollar is down against the greenback, it is up against other high beta currencies, including the UK pound. With the situation in Europe so uncertain, it isn’t much of a surprise that European currencies have been hit harder in the wake of the Japanese credit downgrade. Canada’s currency remains stronger against some of the alternatives, especially in Europe. Additionally, Canadian dollar is up against the yen, which continues to struggle as Forex traders question the economic recovery in Japan. At 12:38 GMT USD/CAD is up to 1.0176 from the open at 1.0177. GBP/CAD is lower at 1.6047, down from the open at 1.6104. EUR/CAD is down to 1.2971 from the open at 1.3038. CAD/JPY is up to 78.48 from the open at 77.99.

Yen Slides as Fitch Downgrades Japan

The Japanese yen fell today as Fitch Ratings downgraded Japan’s sovereign credit rating because country’s actions to reduce public huge public debt are too slow. Fitch cut Japan’s long-term foreign-currency rating from AA to A+ and lowered the local-currency grade from to AA- A+. The outlooks on both rankings are negative. Some financial specialists recommended buying the yen against the dollar. They are reasoning that the yen is too attractive amid present turbulent times and the currency would bounce back rather soon. USD/JPY was up from 79.29 to 79.83 and EUR/JPY rose from 101.62 to 101.96 as of 12:08 GMT today.

Aussie Struggles on the Forex Market

Australian dollar is struggling on the Forex market, especially against the US dollar. Concerns about what’s happening in Europe are affecting risk appetite, and sending Forex traders away from riskier assets like the Aussie and to low beta currencies like the US dollar and the Japanese yen.

Risk appetite is playing a big role in the Australian dollar’s performance today. Concerns that the Greece might actually leave the eurozone are increasing, and there are worries that Spain can’t handle its debt. This risk appetite is leading to losses by high beta currencies like the Australian dollar against low beta currencies like the US dollar and the Japanese yen. Australian dollar is, however, higher against the euro, since the euro is in such a bad state.

The Aussie’s case isn’t being helped by the situation with gold, either. Gold prices are falling right now, and the Australian dollar is a commodity currency that derives a significant amount of support from the precious metal. Aussie also gets help from China, since Australia is one of China’s major trading partners. However, China hasn’t been seeing such stellar growth recently. The result is that Aussie is having trouble finding support against some of its counterparts.

At 13:12 GMT AUD/USD is down to 0.0082 from the open at 1.0019. EUR/AUD is down to 1.2859 from the open at 1.2869. AUD/JPY is down to 79.59 from the open at 80.18.

US Dollar Gains Against Euro in Forex Trading

US dollar is heading higher against the euro in Forex trading right now, gaining as concerns about Spain and Greece come into sharper focus. Greenback is also higher against the Canadian dollar and other commodity currencies as oil prices and gold prices drop. UK pound, though, is gaining against the US dollar, as is the Japanese yen.

US dollar is turning in a mixed performance today, gaining against the euro and many commodity currencies as Forex traders look for safe haven against the volatility brought on by troubles continuing in Greece and Spain. In Greece, difficulties about forming a government, and the future of the austerity measuresagreed to for the bailout, are causing uncertainty. In Spain, the financial sector continues to struggle, and doubts remain about Spain’s ability to repay its debts. All of this is weighing on risk appetite and the euro, as well as keeping commodities down and prompting the greenback to gain against the Canadian dollar and the Australian dollar

However, there are other currencies gaining against the dollar. Great Britain pound is showing some strength, and the Japanese yen is higher as risk appetite grows. Concerns are that a higher pound will hurt the British economy, while Japanese leaders fret about the economic impact of a higher yen.

At 12:30 GMT EUR/USD is down to 1.2856 from the open at 1.2901. GBP/USD is up to 1.6077 from the open at 1.6066. USD/JPY is lower at 79.8045, down from the open at 79.9900. USD/CAD is up to 1.0052 from the open at 1.0002. AUD/USD is down to 0.9974 from the open at 1.0014.

Euro at 3-Month Low as Greece May Leave Eurozone

The euro fell today, reaching the lowest level in more than three months against the US dollar, as speculation that Greece may leave the eurozone drove away investors from the shared 17-nation currency.

Greece is still unable to form a coalition government after a week of talks and negotiating. Even if the a government would be formed, the country may still leave the currency union as the Hellenic Republic is reluctant to implement austerity measures that are very unpopular among Greeks. Experts say that in the long term an exit of Greece from the eurozone may benefit both the country and the euro, but in the short term an impact could be very negative.

EUR/USD fell from 1.2901 to 1.2866 as of 8:50 GMT today, while the intraday minimum of 1.2860 was the lowest since January 23. EUR/JPY was down from 103.17 to 103.04.

Pound Gains, Threatens Economy of UK

The Great Britain pound rose today as the safe haven role of the currency helped it to profit from speculation that Greece may leave the eurozone. The strength of the sterling caused worries that it may hurt the UK economy.

The pound gains appeal as the Swiss franc loses it due to the euro-peg. Economists are worried, though, that a strong currency may harm efforts to bring the United Kingdom out of recession. Ian Stannard, the head of European currency strategy at Morgan Stanley, explained:

The U.K. economic backdrop may not be brilliant, but it’s enjoying a haven status because of the political uncertainty in the euro zone. The advantage of sterling over a traditional haven like the Swiss franc is that its asset market is more liquid. The downside is that the strength of the pound may backfire as it hurts exports.

GBP/USD rose from 1.6063 to 1.6072 and GBP/JPY went up from 128.49 to 128.70 as of 8:18 GMT today.

GBP Falls vs. USD & JPY, Gains vs. EUR Over This Week

The Great Britain pound fell against the US dollar and the Japanese yen this week as growing concerns about the health of the UK economy reduced appeal of the currency. The sterling is still perceived as refuge from Europe’s crisis, therefore it gained versus the euro.

Britain’s economy has entered a recession, significantly hurting prospects for the sterling. The Bank of England refrained from expanding stimulus during its last policy meeting, but most economists agree that the country needs quantitative easing. The pound is supported by its status of a safe haven, but such role looks tenuous considering the economic condition of Britain. Anyway, the problems of Europe allowed added to Britain’s strength against commodity currencies of countries that depend on European demand for their exports.

The pound was drifting down against the greenback and the yen since the end of March and it extended this trend for this week. The euro rose on Friday, but that did not help the shared 17-nation currency to erase its losses versus the sterling. The Canadian dollar was more successful, ending the week almost flat after falling for six consecutive trading sessions.

GBP/USD slid from 1.6133 to 1.6070 and GBP/JPY fell from 128.78 to 128.43. EUR/GBP was down from 0.8062 to 0.8033, while during the week it has reached 0.7994 — the lowest since 2008. GBP/CAD climbed from 1.6067 to 1.6201, but retreated to 1.6076 by the weekend.

Australian Dollar Falls as China Signals About Slowing Growth

The Australian dollar slipped, falling to the lowest level this year against its US peer, as negative macroeconomic data hurt prospects for Australia’s exports and general pessimistic sentiment on the Forex market reduced appeal of growth-related currencies.

The National Bureau of Statistics reported that China’s consumer price index fell from 3.6 percent in March to 3.4 percent in April, being in line with forecasts. Industrial production, on the other hand, frustrated forecasters, falling from 11.9 percent to 9.3 percent, while an increase to 12.1 percent was predicted. Other fundamental reports, including retail sales, were also worse than expected. China is the main trading partner of Australia, therefore its fundamentals have a great impact on the Aussie.

The FX market in general also was not supportive for the Australian currency as traders preferred to stick to safer investments. JPMorgan Chase & Co. announced a $2 billion loss, sparking fear among investors. The MSCI Asia Pacific Index of equities slid 1 percent and posted the second week of losses.

AUD/USD was down from 1.0075 to 1.0019 — the lowest rate since December 20. AUD/JPY dropped from 80.50 to 80.08. EUR/AUD went up from 1.2829 to 1.2887.

Negative Outlook for Australian Fundamentals Hurt Aussie

The Australian dollar dropped, reaching the lowest level against its US counterpart this year, as Forex market participants anticipate a set of poor fundamental data from the South Pacific country today.

Australian employment is expected to fall by 4,800 in April, following the increase by 44,000 in preceding month. Analysts predict that the unemployment rate will rise from 5.2 percent to 5.3 percent. The trade balance deficit widened from A$46.0 billion in February to A$49.8 billion in March, according to estimates before the government report.

The news from outside of Australia was also bad. Greece is still struggling to form a new government and the political turmoil threatens the stability of the whole eurozone. The MSCI World Index of shares slid 0.8 percent. All in all, the news was negative for the most currencies, except for safer ones.

Retails Sales Drift Down, Sterling Follows

The Great Britain pound fell today after a report showed that UK retail sale declined. The negative data ahead of the policy meeting makes market participants question what actions the central bank will take.

British Retail Consortium reported that retail sales were down 3.3 percent in April from a year ago. In March, an increase by 1.3 percent was registered. The United Kingdom face a double-dip recession and various indicators show it.

The Bank of England will hold a monetary policy meeting yesterday. Analysts are divided in their forecasts of the central bank’s decision. Many experts predict that the bank will keep its interest rates and asset purchase program unchanged. Yet easing of the policy cannot be considered improbable in the light of poor fundamentals.

Greece, Spain Weigh on Euro

Euro is down across the board today, falling as concerns about what is happening in the eurozone weigh on financial markets around the world. The financial and political turmoil in the eurozone are causing trouble, and the euro is below the 1.30 level against the US dollar as a result.

Thanks to the political turmoil in the eurozone, financial markets are in upheaval today. While the eurozone will take some getting used to Francois Hollande, the new French president, there are more immediate issues pressing right now. It appears that Syriza will be unable to form a government in Greece. Next, tries to go to PASOK and then to the President. If none of these can form a government, new elections will be held. The uncertainty regarding Greece, and whether or not it will live up to its austerity agreements, has increased quite a bit. Additionally, there is speculation that Greece will leave the currency union.