Market Sentiment Improves, South Korean Won Gains

South Korean wonThe South Korean won gained today as the comments of Federal Reserve Chairman Ben S. Bernanke last Friday increased risk appetite among Forex market participants, bolstering appeal of higher-yielding currencies.

Bernanke made comments on August 26 about ability of the US to support growth of its economy in the long run. Markets reacted positively and traders began search for higher-yield. South Korean trade balance surplus widened to $4.94 billion in July from $2.03 billion in June.

USD/KRW fell from 1,080.10 to 1,073.50 today as of 13:46 GMT.

If you have any questions, comments or opinions regarding the South Korean Won, feel free to post them using the commentary form below.

Earlier News About the South Korean Won:

    * Korean Won Falls on Anticipation of Crisis (2011-08-19)
    * Korea's Won Retreats After Rally (2011-08-12)
    * South Korea Holds Interest Rates, Won Goes Lower (2011-08-11)
    * South Korean Won Suffers from Europe's Troubles (2011-07-12)
    * Higher South Korea's Inflation Leads to Gains for Won (2011-07-01)

Rand Advances with Stocks & Metals

South African randThe South African rand rallied today, rising to the highest level in more than a week against the US dollar, as stocks and metals advanced after the speech of Federal Reserve Chairman Ben S. Bernanke last week.

Bernanke said last Friday that the Fed has means to support growth of the US economy, improving market sentiment. The main South African stock index jumped 1.7 percent as prices on the London Metal Exchange increased for a fourth day. South Africa’s economy itself performs not that good, though, and many investors still convinced that the nation’s central bank will cut interest rates.

USD/ZAR fell from 7.1300 to 7.0810 today as of 9:56 GMT and touched 7.0680 — the lowest level since August 17.

If you have any questions, comments or opinions regarding the South African Rand, feel free to post them using the commentary form below.

Earlier News About the South African Rand:

    * Rand Weakens on Prospect of Interest Rates Cut (2011-08-22)
    * Rand Near Monthly High vs. USD on Rate Difference, US Uncertainty (2011-07-26)
    * Rand Weakened by Credit Rating Outlook for Greece (2011-07-05)
    * Rand Weakens with Commodities on US Growth Forecast (2011-06-23)
    * South African Rand Falls on Greek Crisis, Trims Losses (2011-06-20)

Fundamentals are Bad for US Dollar, But Week Wasn’t Bad

US DollarThe fundamentals this week were negative for the US dollar, weakening the currency against some major counterparts, but performance of the greenback wasn’t that bad, considering all the pressure to the downside.

There were plenty of bad new for the dollar this week. Bad housing data, rising unemployment claims and slower that expected growth of the US economy. The week ended with the speech of Ben Bernanke, who hinted at possibility of additional stimulus without detailing an actual plan.

The dollar was dragged down by the unfavorable fundamentals and fell against the euro and commodity currencies (including the currencies of Canada, Australia and New Zealand). On the other hand, the dollar gained against the franc and rallied versus the yen before losing its gains by the end of the week as there aren’t many choices for investors who need a safe currency, but afraid of interventions of Japan and Switzerland. The pound also fell against the greenback as Britain has its own problems that erase attractiveness of the nation’s currency.

Next week may also be hard for the dollar. Analysts predict another unfavorable report about hosing and are pessimistic about employment data.

EUR/USD climbed from 1.4376 to 1.4498, while during the week it dropped to 1.4327. USD/CHF climbed from 0.7904 to 0.8058 and reached the daily high of 0.8157. AUD/USD surged from 1.0380 to 1.0569.

If you have any questions, comments or opinions regarding the US Dollar, feel free to post them using the commentary form below.

Earlier News About the US Dollar:

    * Dollar Drops After Bernanke Speech & GDP Report (2011-08-26)
    * Will Bernanke Announce QE3? Will Dollar Decline? (2011-08-25)
    * Dollar Gains Before Bernanke Speech (2011-08-24)
    * Dollar Falls on China's & Europe's Manufacturing (2011-08-23)
    * Dollar Rises While Traders Afraid of Recession (2011-08-18)

Pound Goes Down as UK Economy Slows

Great Britain poundThe Great Britain pound weakened against the Japanese yen and slowed its advance versus the US dollar after the report showed the UK economy grew with slower pace in the second quarter.

The revised figure for growth of UK gross domestic product in the second quarter of 2011 was 0.2 percent, the same as in the preliminary estimate. It indicates slower expansion, compared to 0.5 percent growth in the first quarter. The report also mentioned that several special events affected Britain’s economy in Q2: the additional April public holiday, the royal wedding and the aftereffects of the Japanese tsunami.

GBP/JPY fell from 126.12 to 125.68 today as of 9:24 GMT and touched the daily low of 125.41 earlier. GBP/USD climbed from 1.6278 to 1.6332.

If you have any questions, comments or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

Earlier News About the Great Britain Pound:

    * GBP Falls vs. EUR with Consumer Confidence & Retail Sales (2011-08-25)
    * Pound Rises as Inflation Accelerates (2011-08-16)
    * Osborne Refuses Review Spending Cuts, Boosting Pound (2011-08-12)
    * Pound Drops with Higher Trade Deficit (2011-08-09)
    * Pound Weakens on Worsening Consumer Sentiment (2011-07-21)

Euro Falls for Second Day vs. Dollar

EuroThe euro fell against the US dollar for the second day and erased gains versus the Swiss franc today as investors are less willing to buy the currency amid signs of problems in Europe and concerns of global economic slowdown.

The decline of consumer confidence in Germany had its negative impact on the shared European currency. GfK stated that German consumer confidence fell from 5.3 to 5.2 this month and wrote in the report:

Economic expectations virtually collapsed in August, and in light of this, there has also been a moderate drop in Germans’ income expectations.

The euro also weakened on the speculation European lawmakers will extend the ban on short sales.

The global weren’t very supportive for the euro either as rising unemployment claims worsened sentiment of traders. Jobless claims in the US rose to 417,000 last week from the previous week’s revised figure of 412,000. Economists anticipated decrease to 403,000.

EUR/USD fell from 1.4412 to 1.4377 today as of 17:39 GMT. During the day the currency pair reached the high of 1.4474 and the low of 1.4327. EUR/CHF traded at 1.4437 today after earlier it dropped from 1.1465 to 1.1407.

If you have any questions, comments or opinions regarding the Euro, feel free to post them using the commentary form below.

Earlier News About the Euro:

* Euro Drops as Europe's Economic Growth Slows (2011-08-16)
* Euro Weakens as Investors Shun European Bonds (2011-08-02)
* Euro Slids for Second Day on Debt Crisis Concern (2011-07-28)
* Euro Posts Weekly Gain After Two Weeks of Losses (2011-07-23)
* Euro Drops as Optimism Caused by EU Summit Wanes (2011-07-22)

Australia’s Dollar Weakens on Germany’s Consumer Confidence

Australian dollarThe Australian dollar fell today against most major currencies, before rebounding, as the report showed consumer confidence in Germany declined this month, reducing appeal of higher-yielding assets.

The drop of German confidence wasn’t very big as the GfK indicator retreated just to 5.2 in August from 5.3 in the month before. The report explained:

    Despite the current crisis on the financial markets, Germans’ willingness to buy is surprisingly robust and increased further in August from an already high level. However, the worsening of the international debt crisis and rising fears of a return to recession for the global economy have clearly left their mark on the economic optimism of Germans.

AUD/USD traded at about 1.0466 today as of 11:16 GMT after dropping from 1.0471 to 1.0428.

If you have any questions, comments or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

Earlier News About the Australian Dollar:

    * Australia Dollar Receives Help from Commodities (2011-08-17)
    * Aussie Falls as RBA Minutes Don't Exclude Rates Cut (2011-08-16)
    * Australia's Dollar Rallies Despite Rising Unemployment (2011-08-11)
    * Consumer Sentiment Curbs Appeal of Aussie (2011-08-10)
    * Australian Dollar Attempts Stop Decline, Fails (2011-08-09)

Australian Dollar Continues Its Correction on Weak Retail Sales

Australian dollarThe Australian currency continued its downward trend against the Forex majors today, as the retail sales report confirmed the negative outlook for the country’s economy.

The Aussie is currently demonstrating its biggest losing streak against the US currency this year. It also fell for the second day against the euro and for the fifth day against the Japanese yen today.

Aussie Rises on Rate Expectations, US Problems

Australian dollarThe Australian dollar continued its gaining streak today, rising against the other major currencies, as the economic analysts expect rate increases and the global investors avoid US dollar.

The Aussie (which is a nickname for the Australian currency) managed to grow against the US dollar for fifth day, also gaining considerably against the Japanese yen and the euro. While isolated analysts forecast rate cuts in Australia due to the declining commodity prices, the majority of the banks’ research departments predict about three rate hikes (for 25 basis points each by the end of the year). Adding more interest rate differential is definitely going to make the Aussie an attractive investment target.

Aussie Rises on Rate Expectations, US Problems

Australian dollarThe Australian dollar continued its gaining streak today, rising against the other major currencies, as the economic analysts expect rate increases and the global investors avoid US dollar.

The Aussie (which is a nickname for the Australian currency) managed to grow against the US dollar for fifth day, also gaining considerably against the Japanese yen and the euro. While isolated analysts forecast rate cuts in Australia due to the declining commodity prices, the majority of the banks’ research departments predict about three rate hikes (for 25 basis points each by the end of the year). Adding more interest rate differential is definitely going to make the Aussie an attractive investment target.

Export & Import Prices Push Aussie Higher

Australian dollarThe Australian dollar gained today versus the euro and the Japanese yen as the advance of import and export prices prompted the speculation that the central bank will raise interest rates.

Australian import prices rose 0.8 percent in the second quarter, while export prices increased by 6.0 percent. The MSCI Asia Pacific Index of regional shares climbed 1.1 percent. The positive economic data caused most market participants to bet that the next move of the Reserve Bank of Australia will be hike, not cut.

Aussie Goes Lower as China’s Manufacturing Slows

Australian dollarThe Australian dollar fell today after the report showed a slowdown of China’s manufacturing. The slowdown may curb demand for commodities and that, in turn, would hurt Australia’s economy.

The Flash China Manufacturing PMI fell to 48.9 in July from 50.1 in June. The Flash China Manufacturing Output Index dropped to 47.2 this month from 49.8 in the month before. Both indexes were at 28-month low. Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, commented on the report:

Franc Continues Run Down on Prospect of Euro-Peg

Swiss francThe Swiss franc extended its losses as traders are worried that the Swiss government is ready to go for extreme measures to tame the excessive appreciation of the currency.

Swiss National Bank Vice President Thomas Jordan signaled that peg of the Swiss currency to the euro isn’t impossible. The franc fell heavily after the news, posting the biggest decline against the euro since the introduction of the shared European currency. Perhaps Switzerland’s central bank has found a way to keep the nation’s currency from hurting the economic growth?

NZ Dollar Heads for Second Weekly Drop

New Zealand dollarThe US dollar fell today, heading for a second weekly decline, as the problems of the US and Europe makes traders less willing to invest in currencies perceived to be riskier.

The currency of the South Pacific nations is linked to economic growth and thus reacts negatively to the prevalent pessimistic mood on markets. Such mood intensifies as the threat of the debt crisis spreading to Italy and Spain increases. The economic situation in the US isn’t much better and the report about consumer sentiment later this day is expected to show the confidence of the US citizens declined. The kiwi (the nickname of the New Zealand currency) erased most of its losses since the initial decline and now continues to go higher.

Osborne Refuses Review Spending Cuts, Boosting Pound

Great Britain poundUK Chancellor of the Exchequer George Osborne rejected demands of the opposition to reconsider the spending cuts that are biggest since World War II. The Great Britain pound reacted positively to the news.

Opposition to the spending cuts is strengthening as riots and looting in London intensifies and spreads to other cities. Yet Britain’s government remains firm in their intention to maintain the record cuts. Osborne explained that the credibility of the UK austerity measures helped in attracting investors to government bonds, aiding the nation’s economy. Prime Minister David Cameron claimed that the planned decrease of expenditure on the police can be performed “without any reductions in visible policing”.

Franc Plunges Heavily on Prospects of Euro-Peg

The Swiss franc slumped today against all major currencies as Swiss National Bank Vice President Thomas Jordan suggested that a short-term peg of the nation’s currency to the euro could be legal.
The SNB was attempting to weaken the Swiss currency for several years. So far such attempts were futile. There is a difference this time, though, as a peg wouldn’t have just one-time effect as the previous interventions, but would put a continuous pressure on the franc. It looks like Switzerland’s central bank is ready for unconventional measures and such measures can help the bank to achieve its goals for making the franc’s strength less threatening to the country’s economy.

South Korea Holds Interest Rates, Won Goes Lower

South Korean wonThe South Korean won declined today as the nation’s central bank kept the main interest rate unchanged, most likely influenced by threat of the European problems and the downgrade of the US credit rating for the global economy.

The Bank of Korea held its seven-day repurchase rate at 3.25 percent. Such move wasn’t unexpected by markets. According to analysts, declining oil prices and a weak currency can help the economy of the Asian nation.

Australia’s Dollar Rallies Despite Rising Unemployment

Australian dollarThe Australian dollar jumped today as gains of US stocks and advance of commodities overshadowed the unfavorable report about employment in Australia

The Standard & Poor’s 500 September futures advanced 1.7 percent, following yesterday’s decline by 4.1 percent. The Thomson Reuters/Jefferies CRB Index of commodities gained 1.4 percent yesterday.

Canadian Dollar Receives Hit from US

Canadian DollarCanada’s dollar plunged today as demand for the nation’s assets deteriorated because of pessimistic outlook for the economy of the biggest nation’s trading partner — the US.

The depressed mood caused fall of equities and decline of commodities. The MSCI World Index of stocks slumped 1.9 percent, while the Standard & Poor’s 500 Index fell as much as 2.1 percent.

Yen Advances, Japan Worried — New Intervention is Coming?

Japanese yenThe Japanese yen advanced today, heading to the highs against the dollar last seen during the post-World War II period, and made the Japanese government even more nervous about the currency’s strength.

Investors seek safer assets after North American and European stocks fell. The Standard & Poor’s 500 Index slid 2.6 percent today and the Stoxx Europe 600 dropped 0.9 percent.