The US Dollar and the Japanese Yen headed for the biggest weekly declines against the euro since May as U.S. housing starts rose and companies reported earnings that topped analysts’ estimates, boosting demand for higher-yielding assets.
The market is indecisive and lack of conviction as you have two distinct camps of bulls and bears
The market reacted to the jitters in Asia, using that as an excuse to square positions before the weekend
Nick Bennenbroek, Wells Fargo Bank, New York. Source: Bloomberg
US Dollar
The interesting Fundamental news for the US Dollar for last week :
The U.S. Dollar pared its gain versus the euro after the Commerce Department said the U.S. housing starts rose 3.6 percent in June to an annual rate of 582,000, the highest level since November.
The Labor Department reported that the number of Americans filing claims for unemployment benefits fell to 522,000 in the week ended July 11 from a revised 569,000.
Meanwhile, in the commercial sector, The Commerce Department reported that the U.S. retail sales increased 0.6 percent last month after a 0.5 percent gain in May.
The Dollar earlier fell against the Yen after a finance official in Japan’s opposition party said the nation should consider diversifying its foreign reserves away from the US Dollar and buy International Monetary Fund bonds.
Confidence among U.S. consumers dropped in July after four months of increases. The Reuters/University of Michigan index of consumer sentiment slid to 64.6 from 70.8 last month.
The U.S. trade deficit fell 9.8 percent to $26 billion in May, the lowest level since November 1999, from a revised $28.8 billion in the prior month that was lower than previously estimated.
US Commerce Department
Our long-term views have become less dollar-bearish on the back of a lower U.S. trade deficit
Themos Fiotakis, Goldman Sachs Group Inc., London. Source: Bloomberg
The U.S. should consider drafting a second stimulus package focusing on infrastructure projects because the first plan was “a bit too small,”
Laura Tyson, Economic Adviser to President Barack Obama.
British Pound
The British Pound declined against the Dollar, losing 0.6 percent to $1.6345.
It will strengthen to 80 pence per euro, compared with 86.36 pence
Barclays predicts.Source: Bloomberg
The British Pound fell against the Dollar for a its longest stretch of declines since April after the British Chambers of Commerce recommended that the Bank of England expand its asset-purchase program to revive the economy
Printing money is a way of cheapening the currency. The probability that they will extend the program is reasonably significant
Jeremy Stretch, Rabobank International, London.
Japanese Yen
Japan’s new top currency official said the Japanese Government would consider stepping into the foreign-exchange market if abrupt Yen moves hurt the economy.
We’ll make judgments based on whether excessive movements in the currency market will adversely affect the economy Rintaro Tamaki, Vice Finance Minister for International Affairs, Tokyo.
The Yen appreciated against all 16 most actively traded currencies in the past month, rising 3.7 percent versus the Mexican peso.
Citigroup entered a so-called long Canadian dollar position against the yen and expects it will reach 90 yen. In a long position, a trader or investor buys a currency on bet it will appreciate.
The Yen typically rises during times of financial turmoil because its trade surplus means the nation doesn’t have to rely on overseas lenders. The dollar benefits as the world’s main reserve currency.
Research Sources: Bloomberg, Reauters
Today Im here to see this updated . Thank you for the latest info and analysis on Forex movements
We are very eagerly watching your articles. Thanks for another great post