The U.S. Dollar traded mixed after the release of economic data raised speculation the Federal Reserve would delay implementing further quantitative easing at this time. According to reports, Consumer Price Inflation remained flat in July for the second month in a row. Core Consumer Prices, which don’t take food or energy costs into account, increased less than 0.1 percent while Industrial Production advanced more than anticipated to 0.6 percent. The New York Federal Reserve’s Index, which reveals manufacturing conditions, fell dramatically and contracted for the first time in almost one year. According to the metrics, general business conditions dipped from 7.4 in July to -5.8 in August. Lastly, demand for U.S. denominated assets declined as investors believe the Euro region is working hard to resolve its debt crisis. The Canadian Dollar went up to the highest price in three months versus its American counterpart, as market investors believe that strong data out of the U.S. will help boost Canadian exports. The Loonie continued to rally versus the majority of its peers as the Index of raw materials showed gains of 1 percent and crude oil reached $94.90 per barrel. Canada’s currency extended its gains subsequent to an announcement by the Federal Reserve indicating that Industrial Production went up 0.6 percent last month.
The Euro weakened against the greenback as the likelihood for further monetary easing dimmed following the release of mixed data out of the U.S. The shared currency remained under pressure given the fact that investors turned pessimistic as the European Central Bank has yet to implement necessary measures needed to stem the debt crisis. The British Pound advanced versus the Euro following the release of the BOE’s Monetary Policy Minutes which showed that all members voted for keeping the interest rate and the asset purchasing program unchanged. The Sterling traded steady versus the U.S. Dollar before it increased, as investors speculated on whether the Federal Reserve will go for another round of quantitative easing. Britain’s Pound reached a session high versus the U.S. monetary unit on reports showing the Unemployment Rate ticked from 8.1 to 8.0 percent even as economists expected no changes.
The U.S. Dollar traded at a one-month high against the Yen as the yield investors gain from U.S. securities hiked to the most in close to three months. The greenback extended its rally versus the Yen after the Dallas Fed President suggested that further quantitative easing at this time would seem like a “political move” and not a measure to boost economic growth.
Lastly, Australia’s Dollar fell to an 8-day low versus the U.S. currency on mixed data out of the South Pacific nation. The New Zealand Dollar hardly changed, as market investors grew concerned over global growth.
EUR/USD- Greece Asks For Extension
The Euro weakened on speculations the Swiss National Bank diversified its foreign currency reserves and sold the shared currency as it attained record reserves in July. The 17-nation currency was also weighed down by news that Greece asked for a two-year extension to implement the austerity plan. The Euro dipped lower following the release of economic reports out of the U.S. which showed a higher Industrial Production. Trading remained light as many market investors are away on summer vacation.
GBP/USD- BOE Released Minutes
The British Pound advanced against the U.S. Dollar early in the day after the BOE published its Minutes from the recent policy meeting; these revealed that the bank’s policy makers voted unanimously to maintain the interest rate at 0.5 percent and the asset purchasing program at 375 billion GBP. On the data front, the Office for National Statistics announced that the Claimant Count declined by a seasonally adjusted 5,900 last month, while economists forecast it would advance by 6,000. Other releases showed that Unemployment in the U.K. fell from 8.1 to 8.0 percent in June.
USD/CAD- Loonie Rallies On U.S. Data
The Canadian Dollar rose to the highest price since May against its American counterpart on speculations growth in the U.S. will help Canada’s exports. The Loonie has benefitted from positive data out of the U.S. especially the better than anticipated Employment and Retail Sales reports. According to analysts, Canada is thought of as a safe haven for investors and this will likely boost the currency’s value. Canada sold $3.44 billion of 5-year bonds at an average yield of 1.538.
AUD/USD- Aussie Trades At 8-Day Low
The Australian Dollar fell against the greenback after Westpac Banking Corporation issued a statement indicating that Consumer Sentiment fell by 2.5 percent this month, after it had advanced 3.7 percent in July. Other official reports revealed that Wages increased 1 percent in the second quarter of 2012, a bigger gain than economists predicted. Market investors remained nervous as previous day data showed that the E.U.’s GDP shrank by 0.2 percent.
Today’s economic calendar shows that the U.K. will report on Retail Sales. The E.U. will issue data on CPI and Core CPI. The U.S. will release Initial and Continuing Jobless Claims, Building Permits, Housing Starts and the Philadelphia Fed Manufacturing Index. Canada will reveal metrics on Manufacturing Sales and Foreign Securities Purchases. Lastly, New Zealand will publish PPI Input and Output.