The US dollar is mixed today as risk once again shifted in favor of lower yielding currencies. The dollar fell vs. the euro and yen despite a better than expected consumer confidence read of 53.5 vs. 50.7 eyed. Recent comments from Fed Chairman Ben Bernanke suggested that the economic growth has been “too slow” and unemployment is currently “too high”.
The euro recovered this morning after a comeback in risk aversion, sending Asian equities lower. German unemployment reported positive data, posting a decline of -17k from a revised -21k drop in July. The data showed that Germany’s labor market is recovery steadily, suggesting that the area is holding up rather well considering the slowdown in a global recovery.
The GBP is trading near a five-week low against the U.S. dollar on gloomy global growth outlook. This comes despite upbeat news that July U.K. mortgage approvals in July and consumer confidence in August exceeded expectations.
The GBP fell because the market was looking for something more robust. The UK economy is still weak even though GDP for the second quarter rose 1.2 percent last week. Expect the GBP to remain weak in the near term.
Canada’s dollar weakened against the greenback for the second day following today’s GDP release reporting that the nation’s economy grew at 2% for the second quarter vs. 2.5% expected. Furthermore, disappointing US economic data heightened investor worries of a faltering global economic recovery, further pressuring the growth-linked loonie. Crude oil, Canada’s largest export, also dropped today, currently trading at 74.38 bl.
The Japanese yen gained against the majors today as further disappointing economic data releases from the US added to the concerns of a faltering global economy. While the yen is trading largely on dollar weakness today, it is still being contained by expectations of currency intervention by Japanese officials.
Japanese Finance Minister Yoshihiko Noda commented today that the government is ready to take “bold” action on currencies, further reiterating that currency movements have been one-sided. In an emergency meeting yesterday, the Bank of Japan said they will boost its lending facility to 30 trillion yen ($355 billion) and keep its interest rates at 0.1%.
The Australian dollar advanced against the majors following reports showing Australia’s retail sales and home building approvals improved last month.
Building approvals rose by 2.3% vs. the previous -3.3% and -0.7% eyed. Retail sales rose 0.7% vs. the previous 0.2% and 0.4% eyed. Later today, GDP for the second quarter will be released with expectations of a gain from 0.5% to 0.9% q/q.
The New Zealand dollar dropped against the majors after South Canterbury Finance Ltd filed for receivership. New Zealand’s government said today that they will repay all depositors of the company, roughly totaling 1.6 billion ($1.12 billion) of assets.
