The U.S. Dollar erased losses against most of its peers after an economic report signaled improvement in the labor sector as Initial Jobless Claims declined to 348,000. Other releases showed that the Federal Reserve Bank of Philadelphia’s Index rose to 10.2, which was higher than anticipated. Economic data suggested that the housing market is recovering while consumer sentiment is on the rise. Commerce Department figures revealed that housing starts jumped 1.5 percent to a 699,000 annual rate. The Canadian Dollar advanced after crude oil reached a five-week high. Oil for March delivery went up to $102.27 per barrel after reaching $102.69, which was the highest rate since the beginning of January. Positive economic metrics out of the U.S., together with speculation on whether Greece will obtain its next bailout packaged, caused the Loonie to surge from February lows. It rallied higher after a German publication Die Welt reported that the E.U. central bank would be swapping Greek bonds for other new securities.
The Euro advanced against the U.S. Dollar following news that the European Central Bank would exchange Greek bonds for new securities, an announcement that boosted speculation that Greece would obtain the much-needed aid package. However, the Euro was also weighed down by rumors that officials may delay the bailout package until Greece holds elections. In the meantime, officials are studying other possibilities such as “extending a bridging loan” which would help Greece meet its repayment obligations come March 20th. The British Pound gained against the U.S. Dollar as a ravage of positive economic data out of the U.S. helped bolster risk sentiment in the market despite ongoing concerns over the Greek crisis. The Pound’s gains were capped on reports that E.U. officials were looking for ways to delay all or a portion of the Greek bailout until the general election scheduled for April. The greenback advanced to a three-week high against the Swiss Franc as worries over the delay of the Greek bailout and the threat of downgrades for a big number of Euro-region banks pushed investors towards the safety of the U.S. currency.
And the strong U.S. economic data also helped the greenback rally versus the Yen which has been under pressure since Monday when the Bank of Japan announced its intentions to increase quantitative easing. In addition, the possibility that the Federal Reserve may also go ahead with another bout of Q.E. helped the greenback rally against the Japanese currency.
Lastly, the Australian Dollar advanced against the U.S. currency despite doubts over the Greek bailout as employment reports showed that the Aussie economy added 46.300 jobs in the month of January. Other data indicated that inflation expectations dipped to 2.5 percent in January. And New Zealand’s Dollar traded mixed against the U.S. monetary unit after data revealed the country’s manufacturing sector expanded at a slower pace than expected.
EUR/USD- ECB Will Swap Bonds
The Euro erased losses against the U.S. Dollar after the German newspaper, Die Welt, announced that the European Central Bank will exchange 50 billion Euros in Greek government bonds for new Greek bonds –a transaction that is expected to be complete by February 20th. However, after the teleconference between E.U. Finance Ministers and Greek leaders, worries over a delay persisted. The Euro was weighed on by news that Moody’s may downgrade the credit ratings of more than 100 banks in 16 countries across the Euro-zone, citing the debt crisis as the main reason.
GBP/USD- Sentiment Index Climbed
The British Pound advanced against the U.S. Dollar after the U.K.’s Nationwide Building Society indicated that the index of consumer confidence rose from 38 to 47 which was more than expected for January. The Sterling pushed higher after the release of better than anticipated unemployment, housing and consumer confidence data out of the U.S.
USD/CAD- CAD Rises On Risk Appetite
The Canadian dollar rose from its February lows against the greenback as risk appetite reigned in the market on predictions that Greece will receive the bailout package. Investors are optimistic Greek will obtain the aid package, especially since a report in Die Welt indicated the European Central Bank will exchange Greek bonds for new ones. This announcement pushed the Loonie higher against the majority of its counterparts. The Canadian Dollar rallied further as its American counterpart indicated that initial jobless claims slumped to the lowest in four years.
AUD/USD- AUD Advances On Payrolls
Australia’s Dollar rose against the greenback as economic data revealed the biggest increase in payrolls in over one year. The country’s statistics bureau indicated that payrolls rose by 46,300 and the rate of unemployment slipped to 5.1 percent. According to analysts, this reduces the likelihood the Reserve Bank will cut interest rates and the Aussie will probably remain strong. The currency rallied further after the German newspaper Die Welt reported the intentions of the ECB to swap Greek bonds for new ones.
Today’s economic calendar shows that the U.K. will release data on Retail Sales (MoM). Canada will report on Core CPI and CPI as well as the Leading Indicators. Lastly, the U.S. will also announce its CPI and Core CPI.