The Canadian dollar weakened against the greenback overnight

The US dollar traded higher against most majors following the release of positive US growth data. However, the greenback is still being pressured against higher-yielding currencies as risk appetite flowed back into the market.
GDP q/q for the second quarter rose to 1.6%, better than the expected 1.4%.
Personal consumption also rose to 2.0% from the previous and eyed 1.6%. The market remains watchful today ahead of today’s conference where Fed chairman Ben Bernanke will be scheduled to speak. Speculation is that Bernanke will signal measures to stimulate the economy.

The euro gave up some of yesterday’s gains ahead of ECB President Jean-Claude Trichet’s statement this afternoon. Prediction is that Trichet will continue his hawkish stance on the Eurozone, as he had commented on August 5 that the region’s economy is surpassing forecasts which may lead the ECB to phase out its emergency lending measures.

Despite positive UK growth data, the British pound declined 0.45% against the dollar. GDP for the second quarter rose 1.2% vs. the previous and eyed 1.1%.
According to Bloomberg, the UK expansion during the second quarter is the largest “growth spurt since 2001 as companies rebuilt stocks and construction work surged”. The positive growth data further worried some policy makers as it suggests there may be further threats to inflation.

The Canadian dollar weakened against the greenback overnight, however rebounded during the open of the NY trading session following the positive US data releases. As a commodity linked currency, the loonie continued to be pressured by lower commodity prices. Crude oil for October delivery fell 0.2% to $73.11/bbl.

Given its safe-haven status, the Japanese yen declined as risk appetite recovered. Prime minister Naoto Kan recently commented that Japan will be willing to take bold actions to reduce its value. Furthermore, the Democratic Party of Japan called on the Bank of Japan yesterday to “take further steps” in boosting the economic growth. Economic ministers will meet later today to discuss policies, including the current currency situation.

The Australian and New Zealand dollars benefited from the increase in risk appetite today, rising against the safe-haven yen and dollar as economic sentiment improved. Ahead of Bernanke’s speech today, investors are adding bids to higher-yielding assets on speculation that the Fed will provide further stimulus measures. Ahead next week, Australia’s GDP for Q2 is scheduled for release with an expected slight gain.