Currency Updates

The pound declined in the end of this week, after the Bank of England affirmed that it will expand the current asset purchasing program in order to assure Britain’s financial system sustainability.

After reaching a nine-month high versus the greenback and gaining consistently versus the euro, the pound lost sharply towards the end of the week as the Bank of England stated that it will proceed its asset purchase program, mentioning that quantitative easing is still necessary to assure stability in the British economy. During this week, the pound traded above 1.70 versus the greenback, being the first time it crossed this mark in 2009, as signs of economic recovery raised investor’s confidence to purchase attractive pound-priced assets, but several factors still weighed on the pound’s outlook, halting a 3-week rally towards the end of the week.

Even if this week global economic reports and figures helped traders to invest further in riskier assets, the specific situation in the British financial system still remains rather complicated, as the Bank of England indicated this Friday, considering the current situation as fragile, which caused a mass evasion of capital from Great Britain’s equities markets this Friday, affecting the pound directly.

GBP/USD ended the week at 1.6685 after crossing the 1.70 mark one day earlier.
The U.S. dollar pared this week’s losses versus the euro as employers cut less-than-expected jobs in the country, adding optimism to the world’s wealthiest economy.
The dollar reached a seven-week high versus the yen and gained versus most of the 16 main traded currencies as a report in the U.S. indicated that fewer jobs were cut in July than in June, suggesting that employment conditions are improving in the North America, which reflected positively for the greenback outlook, making the U.S. currency to end the first week gaining versus the euro, after 2 consecutive weeks of losses.

EUR/USD traded at 1.4160 as of 18:56 GMT after being traded at 1.4381 hours earlier.
The U.S. dollar pared most of this week’s losses versus its Canadian counterpart as a report today indicated that the number of job cuts in Canada was higher than what economists predicted.

After trading at a 10-month high in the beginning of the week, the Canadian dollar reverted its winning streak and declined even further today as a government report indicated that employment figures shrank much beyond economists forecasts, making the loonie to be traded at a one-week low after the report was published. Commodities and stocks decline influenced by weaker corporate and banking earnings pushed the Canadian currency down this week, as traders fled riskier assets to seek safety in more conservative investments like bonds and currencies like the Japanese yen and the U.S. dollar.

The Canadian dollar was overpriced and today’s job data was the perfect excuse for traders to profit and make the loonie to return to more realistic levels, according to currency specialists. This week, even the Bank of Canada showed concerns regarding the loonie’s rapid rise, and today’s movement could be even be considered adequate for the Canadian economy.
USD/CAD declined sharply after the employment report being traded at 1.0836, a significant rise from yesterday’s rate of 1.0735.