The Euro continued its climb towards 1.50, but couldn’t sustain its momentum after comments released from the European Central Bank. ECB Governing Council member Miguel Angel Fernandez Ordonez stated that he expects a strong slowdown in the Euro zone. Look for the euro to remain sidelined today under holiday trading conditions.
Sterling remained underpinned against the dollar, but hit a four and a half year low against the euro as the market focused on slow growth out of the UK. The office for National Statistics stated that the economy grew by 0.7 percent in the third quarter, below the previous estimate of 0.8 percent, while annual growth was revised down to 3.2 percent from 3.3 percent. Look for sterling to continue to be pressured with a potential rate cut from the Bank of England on the table.
Amid thin trading conditions with a holiday in Japan today, the yen strengthened against the dollar reaching two and half year highs. With investors continuing to remain risk adverse, look for the yen to benefit as investors unwind carry trade positions (using cheaply-borrowed yen to buy higher-yielding currencies).
The Canadian dollar held close to familiar ranges amid thin trading conditions and little data out of Canada. With oil trading at $97 a barrel and continuing its push towards $100, look for the loonie to remain well supported.
The Australian and New Zealand dollars both held onto recent ranges as investors remain side lined due to risk aversion. The market will turn towards Saturday’s elections in Australia, however, the outcome should have little impact on the Australian dollar.
The Mexican peso held close to Wednesday’s ranges, but below the key psychological level of 11. Releasing yesterday was Mexico’s bi-weekly CPI figure, which came in +.64 percent. In other news Mexico’s central bank announced today that it would hold rates steady at 7.50 percent.
