The U.S. Dollar gained on Monday as demand for safety increased while investors grew impatient after the Euro-zone?s Finance Ministers met for the third time in order to reach an agreement that would allow Greece to receive its next bailout payment. Market investors also remained concerned that an impasse between U.S. President Barack Obama and lawmakers may prompt the country to fall into another recession. The economic calendar was light as markets re-opened after the Thanksgiving Holiday. The Chicago Fed National Activity Index showed a slight decline to -0.56 percent, while the Dallas Fed Manufacturing Index fell from 1.8 to -2.8 percent. Meanwhile, Canada?s Dollar dropped against the majority of its counterpart and slipped from close to a two-week high against the greenback as risk appetite ebbed in the market. The Loonie was weighed down by news indicating a decline in stocks and crude oil and by reports that the Bank of Canada?s Governor, Mark Carney, was named the new governor of the Bank of England.
The Euro fell for the first time in more than one week against the Yen as the region?s Finance Ministers met for a third time in order to reach an agreement on how to handle Greece?s next bailout. As there were no signs that the meeting produced positive results, negative sentiment dominated the market. It all seems to be in the hands of Germany, where Chancellor Angela Merkel is running for a third term in office. Chancellor Merkel has reiterated taxpayers won?t have to come up with more money in order to cover Greece?s bailout. There was, however, some positive news suggesting that Saturday?s tele-conference was successful and that the Finance Ministers did manage to secure a 10 bn Euro bridge for Greece to fill its budget gap. But the Euro continued to spiral to the downside as regional elections in Spain revealed that the people favored what the extreme pro-Catalan independence party advocated, which in turn led to speculation that the country will become even more unstable. The British Pound weakened against the greenback as risk appetite waned. However, this time the situation in the Euro-zone is not the sole reason. Recent minutes published by the Bank of England confirmed that policy makers were not considering further QE for now, as Gross Domestic Product rose in the third quarter and Retails Sales posted better than predicted. Despite looming traces of a recession, U.K. lawmakers suggested that the country would remain resilient.
The Yen increased against all of its counterparts after a drop in global stocks boosted demand for refuge. The Yen was also supported by reports indicating that the meeting of Euro-zone Finance Ministers didn?t deliver positive results. Also, the Bank of Japan?s minutes showed that two of its board members were in favor of more radical measures in order to bolster growth. This was in fact seen as a new division among policy makers. Continued concerns over the December 16th elections prompted a massive sell-off of the currency.
Lastly, in the South Pacific, the Australian and New Zealand Dollars traded little changed against the U.S. currency as investors anticipated the outcome of the E.U. talks.
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EUR/USD- Ministers Continue To Debate
The Euro declined against the U.S. Dollar as concerns over the talks between E.U. Finance Ministers continued to weigh on the shared currency. Market investors were also cautious in trading as the Separatist Party in Catalonia (Spain) won the election this weekend. This underlined the fact that the results could have a negative impact on the Euro?s fourth biggest economy since Catalonia comprises 20 percent of the nation?s economic activity, and accrues the highest tax revenue for the central government. On the data front, Germany reported a decline in the Index of Consumer Climate. According to official reports, it dropped from 6.1 to 5.9 this month
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GBP/USD- Sterling Falls After E.U. Meeting
The British Pound pared losses against the U.S. Dollar and the Euro after the Bank of England named the Bank of Canada?s Governor, Mark Carney, as their new chief. According to reports, the U.K.?s central bank is preparing to become the ?most powerful? in the world as it will oversee the financial system in an effort to avert another economic crisis from taking place. Investors await today?s reports which are expected to show an increase in Gross Domestic Product.
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USD/CHF- Greenback Gains On Franc
The U.S. Dollar edged higher against the Swiss Franc as risk appetite waned in the market while investors waited for signs that the Euro-zone?s Finance Ministers reached an agreement to provide Greece with the next tranche of bailout payments. However, this was not the case despite comments by German Chancellor Merkel suggesting a deal may be close. On the data front, the number of people employed in Switzerland climbed from 4.07 to 4.12 million in the months between July and September.
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USD/CAD- Loonie Dips On Stocks And Oil
The Canadian Dollar fell against its U.S. peer as investors grew concerned the Euro region?s leaders would not come up with an answer that would help Greece obtain its next bailout payments. The Loonie was also weighed down by reports showing a drop in stocks and a dip in Crude Oil for January delivery. According to official figures, crude traded at $87.73 per barrel at the New York Mercantile Exchange. Canada?s Dollar remained under pressure as Mark Carney, the central bank?s governor took over as head of the Bank of England.
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Today?s Outlook
Today?s economic calendar shows that the U.K. will report on GDP QoQ and YoY, as well as on Business Investments. The U.S. will release data on Durable Goods Orders, Core Durable Goods Orders and CB Consumer Confidence. Lastly, Australia will publish Construction work statistics.
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Source: http://traderbase.iforex.com/iforex-daily-november-27-2012/2436
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