The EURO continues to hold the advantage over the Greenback climbing to a near 12 month highs as neutral to positive data continues to roll out of Europe and investors continue to shy away from the once mighty Big Dollar if favour of risker assets. The German ZEW Survey (a medium term forecast for about Germany's economic situation) released Monday came in at 57.7 up from a previous reading of 56.1 indicting a positive sentiment within the German economy. Despite a stronger reading in US Retail Sales (actual 2.7%; previous -0.10%) and an increase in the Producer Price Index for August (actual 1.7%; previous 0.8%) the EURO appreciated against the Big Dollar with the pair trading between 1.4550 and 1.4680. Wednesday's release of Euro Zone CPI surprised the market on release with the monthly figure coming in at 0.3% compared with a reading -0.7%. Across the Atlantic, US CPI, Quarter 2 Current Account Balance and Industrial Production for August all came in relatively upbeat, resulting once again in the Greenback falling against the EURO, hitting a 12 month low of 1.4736. Thursday saw some more optimistic data out of the US with housing starts up 1.5% for the month of August, the highest level in 9 months, for an annual rate of 598,000 and the Philadelphia Fed survey for September also expanding from a previous of 4.2 to 14.1. Despite the positive US data and an increase in Euro Zone Trade Balance for July, the market chose to ignore green shots story in the US instead getting back into the EURO, pushing the 16 national legal tender higher and for it trade to within a range of 1.4690 to 1.4760. German PPI on Friday showed its first positive signs in almost a year and the Euro Zone current account went from a deficit to a surplus, however this was not enough for the market to buy the EURO. Again gains on the topside were limited with the first resistance level being found at 1.48 nevertheless it did manage to hold above the recent support level of 1.4650.
Sterling gradually declined against the Greenback last week. Mervyn King signaled that he might reduce the remuneration of commercial bank reserves on Tuesday to try and stop banks hoarding liquidity, which saw cable dip from a high of 1.6650 to 1.6403. Then on Thursday/Friday Lloyds failed to raise enough capital to satisfy the FSA that the bank could withdraw itself from the Government's toxic debt insurance scheme. This saw GBP/USD fall and finish the week at 1.6296.
The Australian Dollar started off the week above the 0.86 cents level as broad Greenback weakness continues to flow through the markets. A slump in the local equity markets Monday and a brief bout of profit taking was enough to push the little battler below the 0.86 cents mark mid morning with it eventually hitting a low of 0.8550. The minutes from the Reserve Bank of Australia's September 01st meeting released Tuesday revealed that the central bank is in no hurry to raise rates stating as at the previous meeting members noted that the policy decision in the near term involved balancing the risk of over-staying an accommodative stance, and that of prematurely tightening and adversely affecting confidence and demand. In offshore trade and after the market digested the RBA's release, the Australian Dollar softened briefly during European trade before resuming its ascent during New York trade as investors took on more risk with the eventual offshore high being 0.8645. In Wednesday trade, investors continued to shy away from the Greenback if favour of riskier assets, pushing the Australian Dollar to an eventual high of 0.8749 despite a raft of positive data released in the US. During Thursday's trading session to AUD maintained its bullish run of late trading between 0.8690 and 0.8750 however a dip in commodities and a slide in US equities late in the session saw traders step in and take some long awaited profits. Gains Friday for the Aussie were limited to a 70 point range (0.8650 - 0.8715) as markets paused briefly in anticipation for the impending G20 meeting in Pittsburgh and the expectations the organisation had for future global growth.
The New Zealand Dollar started the week above the 0.70 cents mark after it hit a yearly high on Friday in New York trade of 0.7080. However a surprise fall in July Retail Sales (actual -0.5%; previous 0.4%) was enough for the market to briefly dump the over performing Kiwi Dollar. On release of the data, the NZ Dollar fell from just above 0.7040 to 0.6970 before a sense of calm returned and the dollar being pushed towards the 70 cents yet again. With no significant data out of New Zealand this week, the Kiwi mirrored the movements of its Trans Tasman rival moving above the 0.71 cents mark before touching albeit briefly the 0.7150 mark. With equity markets down a touch on Thursday, traders took the opportunity to sell high yielders in a brief bout of profit taking which saw the Kiwi fall from an intraday high of 0.7150 to 0.7080. In Friday trade the Kiwi tracked sideways for the majority of the European and US sessions, briefly spiking to 0.7150 before a late sell off saw it d rop to 0.7080.
The Canadian Dollar had yet another strong performing week. Investor's willingness to feed their risk appetite on the back of increasing commodity prices, positive equity markets and healthy US and Canadian data, saw the currency push past the August low of 1.0628 to hit 1.0589. Midway through the week the USD was showing signs of strength at 1.0600 before staging an overnight rally to retrace back above 1.0750 in the Friday morning session. Canadian dollar buyers are hoping the Loonie can close under the 1.0700 level, to ensure a positive start to next week.