The British Pound continues its rocky decline
Britain’s currency continued on its rocky decline, across the Atlantic, Canada’s dollar rose for the eighth consecutive day, the currencies longest streak in over five and half years, as gains in both stocks and persistent strength in commodity prices pushed investors into currencies tied to economic growth. Yesterday, the Loonie reached its strongest level in over seven weeks, as crude oil, the nation’s biggest export, traded above $80 a barrel for a fifth consecutive session. The Canadian currency strengthened 0.3% against the neighboring U.s currency, hitting to 1.0240, its strongest value since January 15th.
Another one of Britain’s former colonies, Australia, continued to produce positive signs of recovery as consumer confidence edged higher this month, a sign that households are weathering the central bank’s decision to raise borrowing costs last week for the fourth time in five meetings. Yesterday, the Westpac Banking Corp. released its consumer confidence sentiment- Survey of about 1,200 consumers which asks respondents to rate the relative level of past and future economic conditions, employment, and climate for major purchases. The sentiment index gained 0.2% to 117.3 points. The survey was conducted during the same week that the RBA raised the benchmark lending rate by a 0.25bps to 4%, adding to similar to moves made in December, November and October of last year. According to central bank officials, Australia’s economy is likely to expand at or above its average pace over the next few years, boosted by rising employment and investment spending by resources companies. Yesterday, the AUD/USD continued its bullish trend- rising 0.718% over the course of the day to close at 0.91516.
While consumers continue to shrug off the recent string of interest rate hike, rising borrowing costs continue to hurt the housing market as home loans fell the most in nearly eight years in January. The Australian Bureau of Statistics reported that the number of home loans plummeted by 7.9%, the biggest fall since June 2000, after the phasing out of last year’s first-home buyers’ grant boost and interest rate rises sapped demand. This unexpected fall marks the fourth decline in housing finances since the RBA commenced tightening its monetary policy. The Australian Bureau of Statistics reported that January’s disappointing result follows a revised 5.1% drop in December- the market had predicted 2% increase in January.
At half past midnight tonight Australia will release its Unemployment Rate for February. Unlike some of the other developed nations, Australia’s Unemployment is well within the single digits and has been steadily decreasing. Last month, Australian employment beat expectations for four months in a row, rising by 52,700, more than three times the expected number. As a result, the unemployment rate slipped to 5.3%, the lowest in a year. This time the forex online market predicts that the jobless rate will hold steady at 5.3%, after employment change is predicted to increase by 15.3K for February.
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UK house price gauge helps Greenback to score high
The British Pound fell for a second day against the U.S Dollar after a U.K. house price gauge was weaker than the forex online market had forecasted, a sign the country’s recovery may be running out of steam. The Sterling slid against 15 of its 16 major currency partners, following the Royal Institute of Chartered Surveyors (RICS) report that housing prices within the U.K rose by 17%, falling far below market expectations of a 30% increase. After tumbling 0.64% against the USD yesterday, to close at $1.50530, the Pound continued to slide. Following the release of the worse than expected RICS House Price Balance, the GBP touched $1.49745, down 0.52% from yesterday’s closing.
According to the BRC Retail Sales Monitor, UK retail sales saw a renewed strong growth in February following January’s unexpected weak outturn, due primarily to the unseasonably cold weather and the hike in Value Added Tax. Like-for-like sales rose 2.2% on the year and total sales were up 4.5% from February 2009. Over the three-month period of Dec-Feb like-for-like sales were 2.1% up on a year ago and total sales were 4.1% higher. The BRC said that sales had been boosted by the poor performance of retailers in February 2009, when like-for-like sales had dropped 1.8%, hit by snow and consumer caution.
Canadian housing starts rose more than expected for a second straight month as multiple-dwelling projects soared, Canada Mortgage and Housing Corp. reported yesterday. Housing Starts increased by 6.1% in February, strengthening views that the residential sector is a key leader pulling the economy out of recession. New home construction rose to a seasonally adjusted annualized rate of 196,700 units from a revised 185,400 units in January. Following this stronger than expected data, as the USD/CAD stuck a six-week high against its American counterpart of 1.0257. The Loonie closed at $1.02790, appreciating a total of 0.127% from the day’s open.
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European currency manages gains against its American Counterpart
The Euro climbed against the yen and the dollar for a second day as expectations increased that Greece will receive financial assistance, boosting demand for higher-yielding assets. Following yesterday’s meeting between French President Nicolas Sarkozy and Greek Prime Minister, George Papandreou, Sarkozy announced that “If it were necessary, the states of the euro zone would fulfill their commitments.” Throughout his speech he continually re-iterated that there can be no doubt in this regard and that “While Greece doesn’t need assistance right now, he stated that “we have measures, we are ready, we are determined”. The 16-nation single currency appreciated against 11 of its 16 major counterparts, as Sarkozy’s comments are among some of the strongest by an EU leader to signal that the bloc would bail out Greece, in a desperate attempt to try to warn investors off making further bets against the euro and Greek bonds.Tomorrow (March 9th), the Greek Prime Minister, George Papandreou will meet U.S. President Barack Obama in Washington.
This morning the single European currency managed to regain all of last week’s heavy losses against its American counterpart. The EUR/USD rose as high as $1.36958 this morning, up 1.23% from last week’s close. The yen dropped as Asian shares extended a global stock rally, curbing demand for Japan’s currency as a refuge. The Yen fell 0.74% against the Euro in the forex online market as the EUR/JPY jumped to 123.891 this morning, following last week’s closing price of 122.993.
Last Friday, following news that the Greek parliament had passed its austerity package, the Euro rose high as $1.3613 against the U.S Dollar. Following her meeting with the Greek Prime Minister in Berlin last Friday, German Chancellor Angela Merkel announced that Greece hadn’t requested financial support to deal with its debt crisis. The German chancellor stated that she is optimistic that Greece will not need aid from other Euro-Zone members. However, despite her hopeful comments, the Euro still headed for a weekly loss against the U.S Dollar. The pair closed at $1.35291, down 0.36% from the day’s opening price and down 0.658% from the week’s open – making last week the currency’s sixth weekly loss in the past seven weeks.
This morning the (1100GMT), Germany will release its monthly Industrial Production for January – a leading economic indicator that reflects the change in the total inflation-adjusted value of output produced by manufacturers, mines and utilities. In December, Europe’s largest economy saw an unexpected drop of 2.6%. Analysts predict that Germany will see a renewed rise of 1.1% in its industrial production for January.
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