The U.S. dollar is ending the week slightly stronger against the euro as the single currency's gains were stalled after the breach of the 1.27 level. The dollar fell to a 2 ½ -month low against the euro amid a broad increase in risk appetite after strong Australian and Canadian employment data and an ongoing run of disappointing U.S. data. Some analysts believe that the dollar's recent weakness is due to a corrective rally and will be short lived due to the eurozone's underlying debt issues which will dampen the pound as well.
The euro fell victim to profit taking after several days of significant gains against the USD, cumulating in a 2 ½ month high yesterday. The euro was supported earlier this week by strong German factory data and clarity on European bank stress tests. The euro has rallied an impressive 6.1%, since the 1.1877 low in June, though near-term risks continue to loom and it is likely we will see another bout of euro weakness shortly.
The sterling slipped from 2-month highs against the USD after an early rally triggered an unwinding of some long positions as it tracked a slide in the euro. Traders said moves in the currency were exacerbated by thin liquidity.Sterling has rallied in the past month as optimism that strict measures to cut the UK budget deficit will improve Britain's fiscal position.
A stronger-than-expected improvement in jobless figures has made the Canadian dollar the biggest mover in the market today as it surged over 1% against the USD, to its lowest level since June 28.The jobs data for June far surpassed expectations and solidified the view that the Bank of Canada will raise interest rates again this month. The Bank of Canada will meet on July 20th to discuss its next move on rates.
The Japanese yen took the brunt of the losses for the day as traders moved to riskier assets. The dollar and euro both climbed more than 1% against the yen.
The Australian and New Zealand dollars continued to soar on the back of yesterday's positive jobs data, nearing 2-week highs against the USD. The Aussie was able to make its largest gain on yen in 15 months.Recent talk of a rate cut by the Reserve Bank of Australia (RBA) is now off the table and jobs data has sparked talk of an interest rate rise by December. The kiwi is drawing support from the prospect of further NZ central bank rate rises, as soon as July 29.
10-Year Treasury Note Yield: 3.047%Dow Jones Industrial Average: 10,143.16 +4.24%
This market summary is prepared by Union Bank's Global FX Department for the general information of its customers. It is based on the most accurate information currently available, but should not be considered investment advice or a guarantee of future exchange rates or trends.