Australia’s Dollar Weakens on Germany’s Consumer Confidence

Australian dollarThe Australian dollar fell today against most major currencies, before rebounding, as the report showed consumer confidence in Germany declined this month, reducing appeal of higher-yielding assets.

The drop of German confidence wasn’t very big as the GfK indicator retreated just to 5.2 in August from 5.3 in the month before. The report explained:

    Despite the current crisis on the financial markets, Germans’ willingness to buy is surprisingly robust and increased further in August from an already high level. However, the worsening of the international debt crisis and rising fears of a return to recession for the global economy have clearly left their mark on the economic optimism of Germans.

AUD/USD traded at about 1.0466 today as of 11:16 GMT after dropping from 1.0471 to 1.0428.

If you have any questions, comments or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

Earlier News About the Australian Dollar:

    * Australia Dollar Receives Help from Commodities (2011-08-17)
    * Aussie Falls as RBA Minutes Don't Exclude Rates Cut (2011-08-16)
    * Australia's Dollar Rallies Despite Rising Unemployment (2011-08-11)
    * Consumer Sentiment Curbs Appeal of Aussie (2011-08-10)
    * Australian Dollar Attempts Stop Decline, Fails (2011-08-09)

Australian Dollar Continues Its Correction on Weak Retail Sales

Australian dollarThe Australian currency continued its downward trend against the Forex majors today, as the retail sales report confirmed the negative outlook for the country’s economy.

The Aussie is currently demonstrating its biggest losing streak against the US currency this year. It also fell for the second day against the euro and for the fifth day against the Japanese yen today.

Aussie Rises on Rate Expectations, US Problems

Australian dollarThe Australian dollar continued its gaining streak today, rising against the other major currencies, as the economic analysts expect rate increases and the global investors avoid US dollar.

The Aussie (which is a nickname for the Australian currency) managed to grow against the US dollar for fifth day, also gaining considerably against the Japanese yen and the euro. While isolated analysts forecast rate cuts in Australia due to the declining commodity prices, the majority of the banks’ research departments predict about three rate hikes (for 25 basis points each by the end of the year). Adding more interest rate differential is definitely going to make the Aussie an attractive investment target.

Aussie Rises on Rate Expectations, US Problems

Australian dollarThe Australian dollar continued its gaining streak today, rising against the other major currencies, as the economic analysts expect rate increases and the global investors avoid US dollar.

The Aussie (which is a nickname for the Australian currency) managed to grow against the US dollar for fifth day, also gaining considerably against the Japanese yen and the euro. While isolated analysts forecast rate cuts in Australia due to the declining commodity prices, the majority of the banks’ research departments predict about three rate hikes (for 25 basis points each by the end of the year). Adding more interest rate differential is definitely going to make the Aussie an attractive investment target.

Export & Import Prices Push Aussie Higher

Australian dollarThe Australian dollar gained today versus the euro and the Japanese yen as the advance of import and export prices prompted the speculation that the central bank will raise interest rates.

Australian import prices rose 0.8 percent in the second quarter, while export prices increased by 6.0 percent. The MSCI Asia Pacific Index of regional shares climbed 1.1 percent. The positive economic data caused most market participants to bet that the next move of the Reserve Bank of Australia will be hike, not cut.

Aussie Goes Lower as China’s Manufacturing Slows

Australian dollarThe Australian dollar fell today after the report showed a slowdown of China’s manufacturing. The slowdown may curb demand for commodities and that, in turn, would hurt Australia’s economy.

The Flash China Manufacturing PMI fell to 48.9 in July from 50.1 in June. The Flash China Manufacturing Output Index dropped to 47.2 this month from 49.8 in the month before. Both indexes were at 28-month low. Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, commented on the report:
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&nbsp;&nbsp;&nbsp; Headline flash PMI fell below 50 for the first time since July 2010, suggesting slowing momentum of manufacturing activities. This implies that June’s rebound in industrial production was just temporary. We expect industrial growth to decelerate in the coming months as tightening measures continue to filter through. That said, resilience of consumer spending and continued investment in a massive amount of infrastructure projects should support a nearly 9% rate of GDP growth in the rest of the year.

AUD/USD dropped from 1.0748 to 1.0700 as of 10:35 GMT after reaching the intraday high of 1.0772.

If you have any questions, comments or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

Earlier News About the Australian Dollar:

&nbsp;&nbsp;&nbsp; AUD/USD Trades Higher After RBA Minutes (2011-07-19)
&nbsp;&nbsp;&nbsp; Aussies Goes Down as Europe Hurts Risk Appetite (2011-07-18)
&nbsp;&nbsp;&nbsp; AUD Fall with Stocks &amp; Commodities on Concerns for Global Growth (2011-07-15)
&nbsp;&nbsp;&nbsp; Aussie Heads Down on Europe Woes &amp; China's Growth (2011-07-11)
&nbsp;&nbsp;&nbsp; Australian Dollar Falls on Bad US Employment (2011-07-09)


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Yen Advances, Japan Worried — New Intervention is Coming?

Japanese yenThe Japanese yen advanced today, heading to the highs against the dollar last seen during the post-World War II period, and made the Japanese government even more nervous about the currency’s strength.

Investors seek safer assets after North American and European stocks fell. The Standard &amp; Poor’s 500 Index slid 2.6 percent today and the Stoxx Europe 600 dropped 0.9 percent.

Franc Plunges Heavily on Prospects of Euro-Peg

Swiss francThe Swiss franc slumped today against all major currencies as Swiss National Bank Vice President Thomas Jordan suggested that a short-term peg of the nation’s currency to the euro could be legal.

The SNB was attempting to weaken the Swiss currency for several years. So far such attempts were futile. There is a difference this time, though, as a peg wouldn’t have just one-time effect as the previous interventions, but would put a continuous pressure on the franc. It looks like Switzerland’s central bank is ready for unconventional measures and such measures can help the bank to achieve its goals for making the franc’s strength less threatening to the country’s economy.

Canadian Dollar Receives Hit from US

Canadian DollarCanada’s dollar plunged today as demand for the nation’s assets deteriorated because of pessimistic outlook for the economy of the biggest nation’s trading partner — the US.

The depressed mood caused fall of equities and decline of commodities. The MSCI World Index of stocks slumped 1.9 percent, while the Standard & Poor’s 500 Index fell as much as 2.1 percent.

There are positive sing, though, that may precede a change of the trend. The S&P/TSX Composite Index rose 0.4 percent. Crude oil, the main export of Canada, rallied 3.2 percent to $81.82 per barrel. Yield on the two-year government bonds fell five basis points to 0.81 percent.

Yen Advances, Japan Worried — New Intervention is Coming?

Japanese yenThe Japanese yen advanced today, heading to the highs against the dollar last seen during the post-World War II period, and made the Japanese government even more nervous about the currency’s strength.

Investors seek safer assets after North American and European stocks fell. The Standard & Poor’s 500 Index slid 2.6 percent today and the Stoxx Europe 600 dropped 0.9 percent.

The Swiss franc could be the place for investors to put their money in, but the move by Switzerland’s central bank to weaken the nation’s currency made the yen more attractive than the franc as a safe haven. Traders should be cautious, though, as Japan may also intervene to curb appreciation of its currency. Japan’s Finance Minister Yoshihiko Noda spoke today in parliament about danger of a strong currency to the nation’s economic growth.

USD/JPY dropped from 76.95 to 76.46 as of 15:10 GMT today after falling to the record low of 76.34. EUR/JPY sank from 110.63 to 108.37, while earlier it reached 108.31 — the lowest level since March 17.

If you have any questions, comments or opinions regarding the Japanese Yen, feel free to post them using the commentary form below.