The U.S. Dollar posted remarkable gains against the majority of its counterparts despite the release of disappointing employment data. The greenback gained against the Euro at the start of the week after it was confirmed that the Socialist candidate, Francois Hollande, defeated Nicolas Sarkozy in elections for the Presidency of France. The lackluster U.S. employment figures released on Friday added to concerns that the U.S. economy is faltering. According to strategists, market investors will focus on this week’s releases, which include reports on the trade balance. The stats are forecast to be disappointing in part because of a rebound in Chinese imports. Meanwhile, the Canadian Dollar sustained the biggest weekly loss in close to five months on signs that the lackluster data out of the U.S. will dampen demand for the country’s exports. The Loonie was also weighed down by data showing that crude oil slipped below $100.00 a barrel for the first time since February.
With elections taking place in France and Greece, the 17-nation currency fell to a three month low. According to the latest news, Socialist candidate Francois Hollande obtained the majority of votes against incumbent Nicolas Sarkozy. Greek votes haven’t been totally tallied, but market investors wonder whether the two main parties can work together in order to implement the measures needed to continue receiving bailout funds. The Pound weakened against the U.S. Dollar but extended gains against the shared currency as investors continue to view it as a great alternative to Euro assets. In the days ahead, traders will watch for actions taken by the Bank of England which is scheduled to announce benchmark interest rates and a decision on stopping further asset purchases.
The Yen rallied against the U.S. Dollar as markets sought refuge following data releases showing that the U.S. job sector added fewer jobs than estimated, adding to the likelihood that the Federal Reserve will implement further stimuli. Markets in Tokyo remained closed for most of last week in observance of Golden Week.
In the South Pacific, the Australian Dollar fell to a four-month low against the greenback on concerns the world’s biggest economy isn’t recovering as expected. The Aussie currency had already weakened throughout the week after the Reserve Bank cut interest rates by a bigger percentage than anticipated. The New Zealand Dollar was also hit by aversion to risk as U.S. figures confirmed that the economy added fewer jobs for a second consecutive month.
EUR/USD- Hollande Wins French Vote
The Euro plummeted to a three-week low as French Socialist, Francois Holland was elected France’s next president, and as Greek voters participated in anti-bailout parties, thereby fueling worries that austerity measures will be derailed. The Greek results aren’t final but they’ve prompted concerns on whether the two parties, New Democracy and Pasok will be able to work together to continue ensuring the nation receives bailout aid. According to reports, it looks like New Democracy won the majority of the votes. On the data front, figures issued last week signaled that the Euro-zone may have fallen into a recession.
GBP/USD- Investors To Focus On The BOE
Friday’s market reports indicated that the Sterling dipped against the U.S. Dollar as risk aversion reigned following weak jobs data out of the U.S. and in anticipation of the two elections in the Euro region. In terms of economic releases, the figures on the U.K.’s PMI were more robust than those of the E.U. and prompted a higher demand for the British currency. House Prices continued to dip according to the Halifax Index which showed a -2.4 percent fall. In the days to come markets will pay close attention to announcements from the Bank of England as it’s expected that the central bank will stop the asset purchasing program.
USD/JPY- Yen Rallies Versus Peers
The Yen traded higher against all of its counterparts as refuge demand continued to be the theme driving the currencies in the market. Rumors about a failing Spanish bank may weigh further on the shared currency and cause it to decline even further against the Yen. Data on trade and the Current Account are likely to change the environment when released this week.
USD/CAD- Loonie Drops The Most
The Canadian Dollar weakened the most this year on suggestions the faltering U.S. economic recovery may reduce demand for Canada’s exports. The Loonie erased gains obtained at the start of last week when the central bank’s Governor, Mark Carney, addressed Parliament and stated that an interest rate hike may be needed in order to stem the rise in inflation. On the data front, the nation’s Ivey Purchasing Manager’s Index dropped to the lowest level since the summer of last year.
Today’s economic calendar shows that Switzerland will report the Unemployment Rate and CPI. The E.U. will release the Sentix Investor Confidence. Canada will issue data on Building Permits. The U.K. will announce RICS House Price Balance. And Australia will publish the Trade Balance.