Pound Sterling
At the start of the week the Pound weakened for a second day against the Euro coming close to reaching a new one-month low after Fitch Ratings cut the UK’s credit rating. The rating was reduced to AA+ from AAA after the agency cited a weak economic and fiscal outlook for its reason. Fitch is the second company to cut the UK’s rating within the space of two-months.
After weakening throughout the week the currency then received a boost thanks to the UK’s latest GDP data. The Pound hit its highest-level in two-months and was expected to make its biggest weekly gain against the US Dollar since June 2012 after the news that the UK avoided slipping into a triple-dip recession. The country’s GDP increased by 0.3% in the first quarter beating economist predictions for a rise of 0.1%. From the previous year the economy has grown by 0.6% its biggest increase since the fourth quarter of 2011.
US Dollar
On Monday the ‘Greenback’ strengthened against the Pound due to the UK economy having its credit rating cut by a second ratings agency. Against the Euro the Dollar strengthened over ongoing concerns over the Eurozone economy. Against the commodity based currencies the currency weakened as global risk appetite returned to the markets.
Tuesday saw the currency decline after the US released disappointing housing data which raised fears over a decline in the world’s largest economy. Existing home-sales fell by 0.6% in March compared to the previous month. Economists had been expecting a rise by 0.8%.
Midweek saw the ‘Greenback’ strengthen to a two-week high against the Euro as investors sought shelter in the safe haven Dollar. Weaker-than-expected data out of the Eurozone painted an increasingly grim picture for the region’s economy causing traders to look for safer options.
The Japanese Yen, meanwhile, jumped briefly against the Dollar after the Associated Press said that two explosions occurred at the White House, injuring President Barack Obama. The AP said on its corporate website that its account had been hacked. The White House confirmed that there had been no incident.
On Friday the Dollar fell against the Japanese Yen after the Bank of Japan chose to keep its monetary policy unchanged and as Japanese exporters sold Dollars for Yen.
Euro
The Euro began the week trading down against the US Dollar as investors awaited the release of the Eurozone’s latest consumer confidence data. Weak PMI data out of the Eurozone also dragged upon the currency. Germany in particular disappointed investors after its manufacturing PMI fell to 47.9 from 49.
Midweek the Euro slumped to a two-week low against the US Dollar and was weaker against the majority of its peers. The currency fell as the latest confidence data out of Germany showed that confidence had declined. The region’s poor data in recent weeks has fuelled speculation that the European Central Bank will cut interest rates in a bid to encourage growth.
PMI data out of Germany showed that the Euro crisis has entered the heart of the Eurozone. The currency recovered some of its losses however after recently re-elected Italian President Giorgio Napolitano chose a new Prime Minister, an important step to resolve the old political stalemate in the country.
On Friday the Euro weakened against most of its major counterparts as speculation builds that the European Central Bank will cut interest rates next week as the Eurozone economy continues to decline.
Australian Dollar
The ‘Aussie’ rallied against the US Dollar and strengthened against a number of its peers as gold recovered from its biggest drop in thirty years. Demand for riskier assets improved as a result and the rise in commodity prices benefitted the Australian economy.
After Monday’s recovery the ‘Aussie’ then fell to a six-week low due to weaker than expected PMI data out of China. HSBC’s preliminary purchasing managers’ index came out at 50.5 for April compared with a final reading of 51.6 for March. A score above 50 indicates an expansion in manufacturing activity. The data added to the currency’s declines after it suffered from a tumble in commodity prices last week.
It continued to fall sharply midweek against the majority of its peers after the nation’s latest CPI data came in lower than expected at 2.5%. Economists had been expecting the figure to be 2.8%.
On Thursday it recovered some of its losses against the US Dollar despite a weaker-than-expected rise in inflation. The disappointing data heightened expectations that the Reserve Bank of Australia could cut interest rates later in the year.
New Zealand Dollar
On Monday the ‘Kiwi’ followed its Australian relation upwards due to the gold rally. It also received support from data that showed that New Zealand saw more immigrants arriving into the country than those departing.
The ‘Kiwi’ then followed its Australian relation downwards due to the Chinese PMI data. The next piece of important data for New Zealand is due on
Wednesday where the nation’s Reserve Bank is expected to maintain interest rates at the record-low level of 2.5%.
It then strengthened against the US Dollar after the Reserve Bank of New Zealand Governor Graeme Wheeler backed away from talking down the currency. Signs that the country’s economy grew at a steady pace also aided the ‘Kiwi’.
On Friday it rose for a third day against the ‘Greenback’ but it also made a third straight gain against the ‘Aussie’. The reason for the gain was that New Zealand’s exports to China have surpassed those of Australia for the first time and the total value of shipments increased to $4.4billion in March.
Canadian Dollar
On Tuesday the ‘Loonie’ came close to a six-month low against the US Dollar due to signs from Europe and China that the global economy is slowing. Despite posting improving retail sales data the currency was unable to shrug off investor worries for the wider economy.
Midweek it then weakened against the majority of its most traded peers due to growing concerns that the US economy is slowing down after orders for U.S. durable goods fell by their biggest margin in seven months. On Friday the currency made its biggest gain in four-months against the US Dollar after crude oil, Canada’s biggest export, rallied on better-than-expected economic data out of the UK and US. Futures of crude oil rose by 2% to $93.28 per barrel, reaching their highest level since the 12th of April.
Comments are closed.