The U.S. Dollar gained against the majority of its trading peers as news that North Korea’s leader, Kim Jong II, died brought uncertainty to the markets. The currency exchange is maintaining the current trends from a few days ago as the U.S. Dollar continues to offer refuge for investors. Some of yesterday’s major news items added to the sentiment of uncertainty, including the death of the North Korean leader, which prompted speculation that tensions between North and South Korea may develop. Furthermore, the Fitch Ratings agency downgraded the credit outlook for France from “stable” to “negative.” Meanwhile, the Canadian Dollar traded in seesaw fashion versus the U.S. currency as crude oil reversed earlier gains. The Loonie fluctuated on speculation that E.U. leaders would likely fail to contain the debt crisis, but it strengthened on data releases confirming that wholesale sales increased in October.
The Euro weakened for the first time in three days versus the greenback in anticipation of today’s Spanish bond auction and as key E.U. finance ministers are attempting to solve the debt crisis by pledging 150 billion Euros to the International Monetary Fund. According to analysts, the Euro is poised to dip lower against the greenback as investors have lost confidence in European leadership and its ability to solve the debt crisis. A look at the price action indicates that the markets are coming to a halt due to the Christmas break; however, strategists expect currencies to continue reacting to the headlines, especially to news related to the Euro region. According to reports, the French bond auction went rather well, despite the prospects of a French ratings downgrade. In a speech to the European Parliament, Mario Draghi indicated that the ECB would protect the region’s banks in order to prevent problems with liquidity. The British Pound dipped versus the U.S. Dollar following the release of economic metrics which continue to indicate that the U.K.’s economy has slowed down. The Sterling slumped versus the Euro despite the possibility that France’s credit rating may be downgraded by as early as this week.
The Japanese Yen traded lower against the U.S. Dollar following an announcement confirming the death of North Korean Dictator, Kim Jong II, which increased uncertainty in the market. The Yen slipped against the majority of its trading peers on concerns that an unstable Korean Peninsula will dampen the outlook for the Japanese economy.
Lastly, the Australian Dollar dipped against almost all major trading currencies as news of Korean Dictator Kim Jong II passing dented risk appetite for the Asian and South Pacific currencies. In New Zealand, a release from the ANZ Bank revealed that fewer than 20 percent of the country’s corporations are optimistic about next year’s economic environment.
EUR/USD- Euro Dips Before Spanish Auction
The Euro slumped against the U.S. Dollar on the heels of today’s bond auction during which Spain is expected to sell 3 and 6-month securities. Meanwhile, investors await the outcome of the conference between E.U. finance ministers during which they are expected to discuss funding the IMF with an additional 200 billion Euros. According to analysts, the outcome of the meeting is not likely to sway markets towards a Christmas mood. ECB President, Mario Draghi, reiterated that the ECB would not step up bond purchasing as it’s not part of the bank’s mandate.
GBP/USD- Home Prices Dip Again
Yesterday’s economic reports supported claims that the U.K.’s economy is running out of steam. The Pound dropped against the U.S. currency following the release of data showing that home prices dropped -2.7 percent MoM.
USD/JPY- Yen Dips On Regional Uncertainty
The Yen dropped against the U.S. Dollar and most of its peers as uncertainty took over market sentiment following news that North Korean Dictator, Kim Jong II, passed away. On the economic front, figures showed that department store sales dipped -1.9 percent nationwide during the month of November, and -3.0 percent in Tokyo.
USD/CAD- Wholesale Sales Rise
The Canadian Dollar traded up and down against the U.S. currency as crude oil and equities reversed earlier gains, dampening the outlook for monetary units related to growth. The Loonie pared gains even as reports indicated a hike in wholesale sales for the month of October. Crude oil rose to $94.08 a barrel for January delivery.
Today’s economic calendar shows that the E.U. will report on German PPI, German Business Expectations, Current Assessment, and German IFO Business Climate Index. The U.K. will issue data on CBI Distributive Trades Survey. Canada will announce CPI and Core CPI. The U.S. will issue metrics on Building Permits and Housing Starts. New Zealand will announce the Current Account and Japan will release the Trade Balance and possibly, the Interest Rate Decision.