Last week gave global investors a possibly brief reprieve from recent financial market turmoil as world stock and bond markets rallied sharply, while commodity prices also firmed.
With that noted, an underlying sense of caution and unease seems to continue permeating world markets.
Market Concerned About Recessionary Impact of G20 Budget Cuts
The previous week’s G7 and G20 meetings had ended with world governments pledging to bring down excessive budget deficits in a concerted attempt to restore confidence in the markets and national creditworthiness.
Nevertheless, the jury is still out as to whether or not these promised fiscal spending cuts will be sufficient to do so without dumping the world’s major economies back into recessionary waters.
Dollar’s Response Mixed Versus Majors
Furthermore, the U.S. Dollar’s performance last week was again mixed versus the other major currencies.
The Greenback gained 1% versus the Japanese Yen and 0.9% against the Pound Sterling, but lost 0.7% versus the Euro as European markets staged a significant comeback.
Dollar Falls Against Commodity Currencies
Also, the Dollar notably reversed its previous week’s sharp rise against the commodity currencies, as commodity prices bounced higher after recent pullbacks.
Specifically, the Australian Dollar rose 4% after having declined 3.9%the previous week, while the Kiwi was up 3.0% last week after having been down 3.6% the week before.
The Canadian Dollar, which had gained 2.8% last week, had lost 2.5% versus the Greenback the previous week.
Weekly Recap and Outlook for the U.S. Financial Markets and Dollar – 7/12/2010
The U.S. Dollar turned in another mixed performance last week, rallying against the Yen and Sterling while falling against the Euro and falling sharply against the commodity currencies. The sharp rise in the Australian, New Zealand and Canadian Dollars could be attributed to recent events in China, as well as to the more obvious cause of a rise in relevant commodity prices. Read full report
Weekly Recap and Outlook for EURUSD – 7/12/2010
EUR/USD began the week on a quiet note with the U.S. market closed for the 4th of July Holiday. Europe’s economic calendar began the week Monday with Eurozone Retail Sales rising 0.2% m/m, slightly better than the 0.1% expected however, the previous number revised to -0.9%. The pair then rallied off of its weekly low of 1.2480 on Tuesday as stocks and bond markets in Europe rallied sharply, also, U.S. ISM Manufacturing PMI came with a reading of 53.8 versus 55.1. Read full report
Weekly Recap and Outlook for GBPUSD – 7/12/2010
Despite Cable making a new intermediate term high, the rate began showing some signs of weakness last week. As well as a week’s worth of negative United Kingdom economic data, the market was also wary that the U.K. budget cuts might adversely affect the stalled economic recovery. Sterling gained early in the week, with Monday’s release of U.K. Services PMI which came out at 54.4 versus 55.1 expected. On Tuesday, the pair strengthened as U.K. stocks soared with the FTSE up 2.4%. Read full report
Weekly Recap and Outlook for AUDUSD – 7/12/2010
AUDUSD had an impressive week, moving up sharply with renewed risk appetite in the markets. The pair began the week trading lower Monday as Australian ANZ Job Advertisements printed at 2.7% with the previous number revised downward to 2.7% from 4.3%. In addition, the Australian Trade Balance came out with a surplus of 1.65B versus 0.53B expected and the previous number revised upward to 1.12B from 0.13B. Read full report
Weekly Recap and Outlook for NZDUSD – 7/12/2010
NZD/USD joined the Aussie rallying sharply last week on renewed risk appetite in the currency markets. Monday had the only major economic release for New Zealand last week, with NZIER Business Confidence which came out at 18 versus a previous reading of 22.
Nevertheless, the rally in the Kiwi was fueled by rising commodity prices which made the rate rise every day of the holiday shortened week. The rate started trading off of its weekly low of 0.6823 on Monday and subsequently rose to a high of 0.7112 made Friday, before declining to 0.7104 to close the week up 3.0%. Read full report
Weekly Recap and Outlook for USDJPY – 7/12/2010
USDJPY rose last week after the previous week’s sell off which tested the 87.00 level on the downside. The rate began the week quietly with a bank holiday in the United States and no important economic releases on Monday. On Tuesday, the rate started heading south as Japanese Leading Indicators came out at 98.7% versus a 99.7% expected. Read full report
Weekly Recap and Outlook for USDCAD – 7/12/2010
USD/CAD declined considerably last week as rising commodity prices and risk appetite returned to strengthen the Canadian Dollar. The pair began the week trading higher in thin holiday trading on Monday. On Tuesday, the rate made its weekly high of 1.0616 before selling off despite Canadian Building Permits showing a drop of -10.8%, considerably worse than the -1.3% expected. Read full report
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