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27 Jan, 2012 - Weekly Currency Update 27/01/2012
Weekly Currency Update 27/01/2012
Europe
Europe’s shared currency advanced to a five-week high against the greenback and rose to a one-month peak against the yen on Thursday following speculation of a breakthrough in Greek debt negotiations and also a day after the Fed pledged that it will hold interest rates low until late 2014.
The euro rose to $1.31678 against the dollar, its highest level since Dec 21, moving beyond its 55-day moving average which comes in around $1.3130. The Stoxx 600 index gained 1.1% to 257.86, erasing a two-day losing streak. However, early this morning, the euro slid amid concerns over Europe’s debt crisis. The common currency dropped 0.2 percent to $1.3079 and slid 0.3 percent to 101.19 yen.
North America
The dollar weakened against all its 16 most-traded peers following the announcement of the Fed that it will keep interest rates near a zero level for a longer period than originally predicted, thus encouraging investors to seek for higher yields. The greenback reached a five-week low versus the euro after policy makers announced yesterday that the benchmark interest rate would remained unchanged until at least end of 2014 from mid-2013 and also because Italian yields dropped to a six-week low. The dollar was little changed at $1.3109 per euro yesterday afternoon in New York after sliding to $1.3184, the weakest level since Dec 21.
Canada’s dollar hit parity with its major counterpart for the first time in almost three months as commodities rose following the report that the Fed will extend its freeze on U.S borrowing costs. The loonie reached the strongest level since Nov. 1 and headed for a 1.1 percent advance on the week. The Canadian currency appreciated 0.3 percent to C$1.0018 per U.S dollar after touching 99.82 Canadian cents.
Around the world
Asia stocks experienced some fluctuations at the end of a slightly positive week, with bourses in Tokyo and Hong Kong losing their earlier gains. The Hang Seng Index slipped 0.1% in Homg Kong, while Japan’s Nikkei Stock Average dropping 0.1%. However, the yen advanced against all of its 16 major counterparts as extended negotiations over a debt-swap deal to avoid a Greek failure boosted the demand for refuge assets. The yen rose 0.4 percent to 101.11 euro today in Tokyo from yesterday, when it also advanced 0.4 percent.
Elsewhere, the New Zealand’s dollar was set to complete a six-week gain after a report showed that the country registered its first trade surplus in five months. The kiwi dollar was little changed at 82.17 U.S cents and set to advance 1.9 percent this week. It slid 0.5 percent to 63.29 yen, snapping the five-day surge to 1.9 percent. The Aussie on the other hand, dropped 0.1 percent to $1.0617 and dropped to 0.7 percent to 81.78 yen.
Finally, South Africa’s rand advanced to its strongest level versus the dollar in two and a half months after the Fed pledged to keep interest rates low until late 2014, spurring demand for higher-yielding assets. The rand appreciated as much as 0.2 percent to 7.8710 per dollar, the strongest level since Nov. 14.
For a more detailed currency outlook or to find out how economic and political news could affect your currency transfers, speak to a deVere FX Manager today.
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