Weekly currency roundup – Another week of improvement for the UK and US economies

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Pound Sterling The Pound made a second weekly gain after the UK currency received support from a host of positive economic data releases. On Monday Sterling made gains against the Euro as data showed that British banks increased the number of mortgages being approved .The data added credence to the belief that the UK recovery is picking up speed.


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Pound Sterling Continued…….During Tuesday’s session the Pound came close to a one-month high against the Euro following the release of the latest UK housing data. A report published by the Royal Institution of Chartered Surveyors soared to its strongest level in seven-years. The currency was also supported from data showing that inflation in the country fell closer to the Bank of England’s target of 2%.

Midweek Sterling made further gains after figures released by the Office for National Statistics showed that the UK economy created 69,000 new jobs in June, smashing forecasts of 34,000. The positive data sent Sterling above the 1.17 level against the Euro.

As the week drew to a close Sterling strengthened further after retails sales data smashed economist forecasts. Sales jumped by 1.1% in July, far above the 0.6% rise expected. On a year by year basis the ONS said that retail sales increased by 3% and sales excluding fuel sales rose by 3.1%.


US Dollar

The US Dollar also benefited from positive economic data this week and ended the week making its biggest advance in a month against the Japanese Yen. At the start of the week the currency strengthened broadly against the majority of its most traded peers after it was boosted by retail sales data. According to the Washington based Commerce Department, retail sales increased by 0.2%. As a result many economists are now expecting the Federal Reserve to begin tapering its asset purchasing programme next month, a stance that supports a stronger Dollar.

Midweek the US Dollar weakened against the Pound and fell against most of its major peers in the afternoon as producer price inflation in the United States came in below economic forecasts. Its weakness was short-lived as a recovery was spurred on by the release of data showing that the number of applications for unemployment benefits fell to a six-year low.


The Euro

The Euro had a mixed week but spent most of it softer against Sterling following the release of positive UK mortgage data.

On Tuesday it found support in the morning after the German ZEW sentiment survey rebounded in August and sentiment across the Eurozone beat economist expectations. The data supports the picture of a Eurozone about to begin a recovery. The currency however spent very little time higher against peers as data out of the USA and UK saw the Dollar and Sterling make gains respectively.

Midweek the Euro spent much of the day down against its major peers despite the news that the Eurozone has finally exited its record long recession. Better-than-expected data out of the UK saw the single currency weaken against the Pound.

As the week drew to a close the Euro weakened for a fifth day falling to a six-week low against the Pound. The single currency is likely to fall further against the Pound as the relentless improvement of the UK economy continues.


Australian Dollar

The ‘Aussie’ is set for a weekly decline as investors await the release of the Australian Reserve Banks policy meeting minutes which are due next week. Speculation is building that the report will show that the Central Bank will hint further reductions to interest rates.

Midweek the currency fell against its New Zealand counterpart as data on wages and consumer spending reinforced speculation that the two Oceanic countries’ economies are diverging. The recorded wage gain was the lowest since December 2009. In the afternoon the currency made gains against the US Dollar as investor speculation over a possible soon to occur tapering of the Federal Reserve’s monetary easing policy waned.

As the week drew to a close the ‘Aussie’ rallied against its peers as commodity prices rose and demand from China increased.


New Zealand Dollar

The ‘Kiwi’ fell against its U.S. counterpart on Monday, as investors remained cautious before the release of U.S. data. The currency failed to make gains despite data showing that house sales in the country jumped by 14.7% on a year-by-year basis.

As the week advanced the currency weakened against its peers including the ‘Greenback’ after US retail sales advanced for a fourth month. Better-than-expected local data however, increased the odds of the Reserve Bank of New Zealand raising rates in the foreseeable future. Traders now believe there is a 96% of the central bank increasing rates by a minimum of a quarter of a percentage point by April.

On Friday the ‘Kiwi’ fell by almost half a cent against the US Dollar after a magnitude 6.6 earthquake struck the centre of the country, the decline was short-lived however.


Canadian Dollar

The Canadian Dollar had a positive week following a rise in global commodity prices.

News that the Eurozone has finally emerged from a record long recession supported commodity-driven currencies like the Canadian Dollar allowing the ‘Loonie’ to strengthen modestly against its US counterpart.

As the week drew to a close the Canadian currency was able to make gains against the US Dollar due to increasing speculation that the US Federal Reserve will begin easing its monetary stimulus measures in September. The currency also found support from a fifth-day of increases in the value of Crude oil as the ongoing Egypt crisis pushed up global oil prices.

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