Euro buoyed by Draghi comments

Pound Sterling

Yesterday the Bank of England announced that it would hold interest rates at a record low of 0.5 per cent and would make no changes to fiscal policy at present. Despite this, the floundering UK economy has left many investors expecting intervention to occur as soon as November. The prospect of further quantitative easing in the months ahead saw Sterling drop to its lowest level against the Euro for two weeks but gain against its weakened US rival. A week of soft UK economic data highlighted how far the country is from recovery and economists have predicted that further negative releases could leave the Pound even more vulnerable to declines.

The Pound is presently trading against the Euro in the region of 1.2443 and is trading against the US Dollar in the region of 1.6177

US Dollar

The advances made by the US Dollar yesterday were lost following the release of data which showed an increase in US unemployment claims. The result left investors slightly more pessimistic regarding the nation’s economic recovery and the ‘Greenback’ declined against several of its peers. Today investors will be looking out for the US Non-Farm Employment figure, a data release which generally causes substantial market volatility. If the figure should come in below the expected level the US Dollar could be bolstered by renewed investor interest in safe-haven currencies.

The US Dollar is presently trading against the Pound in the region of 0.6178 and is trading against the Euro in the region of 0.7693

Euro

At yesterday’s press conference European Central Bank President Mario Draghi pledged, once again, to preserve the Euro. Although Draghi did comment that he can do no more until Spain requests a bailout, the Euro was buoyed and made gains against the US Dollar and Japanese Yen, jumping to a two-week high against both. Revised second quarter GDP for the Eurozone could cause the common currency to fluctuate and the US Non-Farm Payrolls figure is also likely to cause Euro movement.

The Euro is presently trading against the Pound in the region of 0.8036 and is trading against the US Dollar in the region of 1.3001

Australian Dollar

After the ‘Aussie’ experienced a week of declines against its competitors the Australian currency was able to recoup some of its losses following the global rallying of stocks. Heightened demand for high-risk assets allowed the ‘Aussie’ to make and maintain gains against its American counterpart and the Japanese Yen. However, interest in the Australian Dollar was restricted after data showed a drop in construction performance from 32.2 to 30.9. Swaps also demonstrated that that likelihood of the Reserve Bank of Australia lowering its key interest rate by 25 basis points in November was 88 per cent. Some strategists are predicting that the ‘Aussie’ will weaken in coming weeks.

The Australian Dollar is presently trading against the Pound in the region of 0.6334, is trading against the Euro in the region of 0.7878 and is trading against the US Dollar in the region of 1.0247

New Zealand Dollar

The New Zealand Dollar benefited from rallying Asian stocks in the same manner as its South Pacific neighbour. The ‘Kiwi’ gained against one of its largest competitors, climbing from 82.14 US Cents to 82.41. The currency declined slightly against the British pound and also fell by 0.16 Euro Cents. Any movement in the ‘Kiwi’ will probably be caused by the US Non-Farm Employment figure which is expected to yield positive results. As long as the results don’t disappoint expectations or wildly exceed them the New Zealand Dollar should be able to enjoy another slight gain against its US counterpart.

The New Zealand Dollar is presently trading against the Pound in the region of 0.5095, is trading against the Euro in the region of 0.6338 and is trading against the US Dollar in the region of 0.8248

Canadian Dollar

As the US Dollar weakened in the face of slightly disappointing results for US unemployment claims and factory orders the ‘Loonie’ was able to make steady gains. The Canadian currency was helped on its way by a better-than-forecast domestic purchasing manager’s index. Today Canada is due to release its monthly jobs report for September. Economists have predicted 10,000 net new jobs and the unemployment rate to hold at 7.3 per cent. If either of these predictions prove inaccurate the ‘Loonie’ could fluctuate.

The Canadian Dollar is presently trading against the Pound in the region of 0.6302, is trading against the Euro in the region of 0.7839 and is trading against the US Dollar in the region of 1.0202

 

Richard Martin
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After working in business development for a major UK currency brokers for several years, Richard left Britain to help set up the company’s Australian office and now lives and works in Queensland; making the most of his new Down-Under lifestyle.