European debt markets recovered somewhat last week after some relatively successful debt auctions. Also, commodity prices eased, with gold closing the week below the psychological $1,200 level, with a predictably negative effect on the Australian and Canadian Dollars.
Nevertheless, last week saw investors’ unease about the U.S. economy grow considerably, especially in the wake of dovish comments contained in the FOMC Meeting Minutes released on Wednesday which indicated that a sustainable recovery in the United States was likely still years away.
Market Concerned About Double Dip After Disappointing FOMC Minutes
Most of the United States economic numbers out last week continued giving signals of a double-dip recession, which was supported somewhat by the Fed’s disappointing FOMC meeting minutes for June released on Wednesday.
Furthermore, given the notably dovish comments in the FOMC minutes and the uncertain state of the United States economy, the U.S. Dollar is increasingly becoming more and more of a hard sell as the economic numbers released last week amply illustrated.
Basically, it seems like only risk aversion and the unwillingness of major USD asset holders like China to see the currency depreciate is saving the Greenback from a real thrashing at this point.
Dollar’s Response Mixed Versus European and Asian Majors
Furthermore, the U.S. Dollar’s performance last week was generally softer versus other major currencies. Greenback sentiment got notable weaker after Wednesday afternoon’s release of the U.S. FOMC meeting minutes for June.
Overall, by the market close at end of last week, the Greenback had lost 2.2% against the Euro, 2.3% against the Yen and 1.5% against the Pound Sterling.
Dollar Rises Against Commodity Dollars
Also, the commodity dollars generally declined after the previous week’s dramatic run up against the Greenback, despite otherwise negative U.S. Dollar sentiment. This was partly attributed to softer commodity prices, as well as to growing signs of a slowdown in the Chinese economy.
The U.S. Dollar gained 2.0% against the Canadian Dollar, which was the primary mover among the commodity currencies. The Greenback was also down 0.9% against the Australian Dollar at the weekly close, but off only 0.1% versus the more resilient New Zealand Dollar, which closed the week virtually unchanged.
Weekly Recap and Outlook for the U.S. Financial Markets and Dollar – 7/19/2010
The U.S. Dollar turned in another week of mixed results against the other major currencies. The Greenback fell notably against the Euro, Yen and Pound Sterling, although it did manage to rise versus the Canadian and Australian Dollars, and it remained virtually unchanged against the New Zealand Dollar. Read full report
Weekly Recap and Outlook for EURUSD – 7/19/2010
EURUSD continued its uptrend last week which began on Monday with a series of 10 cooperation agreements struck between China and Germany worth approximately $4.4 billion. The agreements, which included a €124 M green fund, and an M.O.U. on the establishment of Chinese-European eco-parks, were for building a “comprehensive strategy partnership.” On Tuesday, EURUSD made its weekly low of 1.2522 as German ZEW Economic Sentiment came out at 21.2 versus an expected 25.2 and Eurozone ZEW Economic Sentiment, also lower than expected at 10.7 versus 16.8 expected. Also on Tuesday, the Eurozone Trade Balance came out with a deficit of -42.3B versus a -39.3B consensus. Read full report
Weekly Recap and Outlook for GBPUSD – 7/19/2010
GBPUSD continued its upward trend last week after U.K. economic releases indicated that the British economy may be showing some signs of recovery. The week started with Cable trading lower after U.K. GDP was released showing an expansion of 0.3% as was widely anticipated. Also on Monday, the U.K. Current Account came out showing a deficit of -9.6B which was considerably higher than the deficit of -4.5B expected. Nevertheless, the previous number was revised upward to a surplus of 0.5B from a deficit of -1.7B. Monday’s U.K. economic releases also included the RICS House Price Balance which printed at 9% versus a consensus of 20% which indicates a decline in U.K. house prices, and the BRC Retail Sales Monitor which came out with a reading of 1.2% year on year, versus a previous reading of 0.8%. Read full report
Weekly Recap and Outlook for AUDUSD – 7/19/2010
AUDUSD last week gave back some of the impressive gains made in the previous week when the Aussie closed up 4% against the Greenback. The rate started the week on soft note despite Australian Home Loans which showed an increase of 1.9% versus the 0.7% consensus, with the previous number revised upward from -1.8% to -1.5%. Also, the Australian NAB Business Confidence Index declined a notch printing at 4 versus a previous reading of 5. AUDUSD then began climbing despite a report of a decline in copper and iron ore imports in China, Australia’s biggest trading partner. Read full report
Weekly Recap and Outlook for NZDUSD – 7/19/2010
NZDUSD started out the week trading higher, after making its weekly low of 0.7055 seen on Monday, the rate began rising despite the U.S. Dollar’s strength against other major currencies. On Tuesday, the rate continued higher as New Zealand FPI gained by 1.3% month on month versus a previous decline of -0.7%. Read full report
Weekly Recap and Outlook for USDJPY – 7/19/2010
USDJPY began the week on a solid note Monday trading off of its weekly high of 89.14 in the absence of any major economic releases for Japan. On Tuesday, Japanese Revised Industrial Production increased by 0.1% versus an expected decline of -0.1% while Japanese Household Confidence came out at 43.5 versus a reading of 42.2 expected. While the pair managed a higher close on Tuesday, the pair soon began declining as sentiment in the market turned risk averse. Read full report
Weekly Recap and Outlook for USDCAD – 7/19/2010
USDCAD consolidated after the previous week’s sharp decline as the Greenback strengthened against the commodity currencies on increased risk aversion. The pair started the week on a positive note on Monday as the BOC released its Business Outlook Survey. The survey, which began in 1997, revealed that its indicators were at historic lows since the survey began. The Canadian firms surveyed expect growth to decrease over the next year. Read full report
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