Increasing concerns over a cool-off in the U.S. economy and the European debt crisis boosted demand for haven currencies like the Yen. Based on last week’s news, restructuring of the Greek debt was not a likely possibility. Today, there’s a glimmer of hope, however, the situation is still creating ripple effects and enormous uncertainty in the currency trading markets. Canada’s Dollar declined following the release of the Beige Book reports which indicated an expansion of the U.S. economy with a slow-down in a number of regions.
Meanwhile, the Euro fell against the U.S. Dollar following statements by Germany’s Finance Minister, Wolfgang Schaeuble, indicating that bondholders should participate in the second bailout package and contribute a large share of the funds.
Other world currency reports revealed that the Pound weakened against the U.S. currency and the Euro, as Moody’s Investors Services stated that the U.K. is in jeopardy of having its credit rating reduced if economic growth remains at the same level. Economists believe that the country will remain “stable.”
Furthermore, the Australian Dollar also fell against the greenback on data released by the Federal Reserve’s district banks (the Beige Book), which showed the economy advanced at a “steady pace” despite the fact that it fizzled out in 12 regions in the U.S. Other FX news reported that the New Zealand Dollar gained as the Reserve Bank decided to leave the costs of borrowing money unchanged. Policy makers stated that commodity prices are still high.